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There's gold in them thar' barns: Milk prices reach record highs

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April 10, 2014

JANESVILLE—How now brown cow?

Superb, thank you very much.

In February, the price of milk in Wisconsin reached a record high of $24.90 per hundredweight, transforming moo-juice into white gold.

The numbers, which come from the U.S. Department of Agriculture's statistics service, are good news for farmers and the local economy.

For nonfarmers, some perspective is needed to understand the impact of those prices.

Although milk prices have always been cyclical, the swings have been more dramatic in recent years, said Marion Barlass, who farms with her husband, Bill, and son Brian east of Janesville.

They milk about 400 Jerseys and have about 1,000 acres of cropland.

“In 2009, there was a time when the base price of milk was below $10 a hundred-weight,” Barlass said.

A hundredweight is about 11.6 gallons.

A decade early, in 1999, the lowest price farmers received was $11.44.

In 2012, prices ranged from $17.00 a hundredweight to $23.20, a shift of more than 35 percent.

Barlass, who serves on the board of National All-Jersey and whose work in the industry once won her Dairywoman of the Year at the World Dairy Expo, explained that exports now have a significant impact on price.

“It's often as powder—powdered skim or powdered whole milk—and most of it is going to China,” Barlass said.

In 2013, dairy farmers exported 15.5 percent of their milk solids. That represents nearly one milking out of every six, said Erick Metzger, general manager of National All-Jersey.

Here's another factor that's driving prices: A drought in New Zealand a season ago led to New Zealand having less milk to export, resulting in higher prices overall, “a double bonus to the U.S. market and prices,” Metzger said.

The weather in the United States has driven up milk prices, too.

“The harsh winter affected productivity here,” Barlass said.

Add to that poor feed quality—stemming from earlier droughts in the Midwest—and you have less productivity from cows.

Finally, the severe drought in California means that many dairy farmers there are reducing their herds.

Less productivity means less milk, and demand drives prices.

When prices go up, farmers can pay off debt and buy new equipment, but they always have to be careful not to go overboard—because the next price swing could be right around corner, Barlass said.

But good milk prices do mean positive things for the state and local communities.

Dairy farming contributes about $26.5 billion to the state's economy, and each dairy cow contributes about $20,000 to the local economy, according to statistics from the Wisconsin Milk Marketing Board.  



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