Dairies pinched by high costs and low returns

Apr 28, 2008

California dairies are being squeezed between increasing costs for feeds and decreasing return for milk, according to a story in the Marin Independent Journal over the weekend. The story reports that 55 percent of Marin's agricultural income - more than $27 million in 2006 - comes from the county's 28 dairies.

Reporter Rob Rogers spoke to UC Davis CE specialist Bees Butler about dairy economic trends.

"The dairy industries in China and India will start to expand because of the incredible growth in those areas," Butler is quoted. "The high price on the world market is going away. It's not going to go up again."

The newspaper article also reported that organic milk production is not the "guaranteed moneymaker it once was." 

"Two years ago, the premiums for organic milk were almost twice what they were for conventional production," the paper quoted Ellen Rilla, director of Marin County UCCE. "That's really dropped. And there's also a cost in terms of production."

Butler said organic farmers are really finding it difficult to find decent organic feed and make organic dairying work.

"Over the last 20 years, the price of milk has averaged between $12 and $13" per hundred pounds, Butler was quoted. "Last year, that price started to increase up to $20. For many dairy producers, that has been a lifesaver, allowing them to catch up and expand after prices were in the dumps for 2005-06."

Yet the conditions that led to those high prices - surging demand for milk in China and India, drought in Australia and New Zealand and a weak U.S. dollar - couldn't last for long, Butler told the paper.

By Jeannette E. Warnert
Author - Communications Specialist