Editorial: Got Milk Money? Farmers Do, at Least for Now
Americans, on average, drink 37 percent less milk today than they did in 1970, The Washington Post reported recently. Back then, consumption per capita was almost a cup and a half per day. It’s now closer to 0.8, according to the U.S. Department of Agriculture. The biggest declines are in the youth market, the 2-11 and the 12-19 age groups. The main culprit seems to be a larger pool of options, not a decline in consumption of beverages.
It struck us that this cannot be good news, and not only because we grew up as true believers in the church of milk-is-good-for-you. As Steve Taylor, the Meriden farmer who formerly served as New Hampshire’s agriculture commissioner, wrote recently in these pages, about 14,000 cows are milked each day in the Upper Valley, producing 280 million gallons of milk a year. He calculates that the dairy industry is worth about $70 million a year, making a significant contribution to the Upper Valley economy. Not to mention that the farms on which those cows live play a key role in the rural landscape that many residents cherish (and many tourists come from out of state to visit).
Counterintuitively, though, prices are strong despite declining domestic consumption of liquid milk. For example, The Associated Press recently reported that Vermont dairy farmers were paid record high prices for their milk in April. Prices are expected to average $22 to $23 per hundred pounds of milk for the year, which would be the highest since the state started keeping dairy price records in 1977. Farmers are said to be using the extra income to pay off debt, repair equipment and make investments in new technology.
This happy circumstance is attributed to a strong export market driven by population growth and the desire of middle- and higher-income people internationally to add dairy products to their diets. The United States now exports 15 percent of its milk, according to the AP, up from 7 to 10 percent a decade ago, mostly in the form of powdered milk, whey powder, cheese, butters and — yes, some milk. Bob Wellington, an economist with the Agri-Mark Inc. dairy cooperative, said, “We say (that) one day a week, all the milk in the country goes overseas.”
As always, though, there is a serpent in the Garden of Eden. High prices could lead to increased production and thus to lower prices. Major international upheaval could depress the global market. New competitors may seek entry into U.S. markets. Climate change could wreak havoc of who-knows-what variety.
If and when prices do decline sharply, provisions in the new farm bill passed by Congress this year are supposed to cushion the fall, although it’s hard for anybody not well versed in farm economics to explain just how that will be accomplished. Apparently farmers will buy insurance and receive payouts when the difference between milk prices and feed prices drops below a certain level. Or something like that.
Anyway, dairy farmers strike us as the ultimate realists. Their outlook seems to be “hope for the best, prepare for the worst.” We hope the good times persist long enough to allow them to make those preparations and maybe have a little left over.