An artical I read in the Lancaster Farm Newspaper

The low price of beef and cheaper feed has led dairy farmers to keep more cows vs culling..This in turn will soon lead to higher milk amoumts produced.This in turn will lead to much lower milk prices?I just read it today,from saturdays paper.

The cows on the cull list are not the best ones and most dairy cattle are sold due to not breeding so they will have to go at some point. Now with cheap feed many will push for more milk per day to help pay bills. Many more smaller dairies will quit and the cows will be bought by others who will often produce more milk than the last owner. Nothing in AG looks real good right now. Tom

No boom happened without a bust plus the more intense the boom the more prolonged the bust. I remember studying at Cornell the boom in wheat that happened with WWI in Europe. The price of wheat was very depressed by 1921 along with land prices falling under their prewar values. Ag machinery builders had built up inventory in terms of raw and finished goods. The 1920' may have been roaring positively for many sectors of the US economy but certainly was not for many farmers. The US farmers who kept a cool head when exports took off during WWI and shortly after weathered the 1920's economy the best. My father's parents did not owe a lot when the crash hit in 1929 which helped them weather the Great Depression.

lots of butter and cheese is in storage now ,,the artical spoke of that too

I just read in the last 10 days or less that there is so much milk that Dairy Farmers have dumped 43 million (gallons, or pounds) of milk because there is serious oversupply of milk!!! & they are trying to bring the price up!

Probably true,but all the herds around here that are being disbursed are going somewhere. The best of the cows are going in to surviving herds for sure. Seems like every week I'm hearing about more guys who are hanging it up.

Supply and demand will balance out over time but it gets nasty in the short term. Guys are strapped for cash. The farmer does not control the price of just about everything he buys or produces. That leaves him with few choices when the prices drop for the product he produces. The short term solution is to increase production to try and maintain gross income. This is what is happening across the products that farmers usually produce. This is a short term solution. The over production will cause the price to fall even further over the longer term. In the past this has caused huge swings in commodity prices. One year little of a commodity is produced so the price raises. Then the next year the product is over produced and the price drops. This boom and bust cycle will eventually even out if left alone. During the down price swings people will be forced out of production. So eventually the production will match the consumption.

The trouble is the government will try to "help" the producers when there are low prices. This just masks the problem and causes the production to not adjust as fast as it naturally would.

The trouble is that this latest price increase in grain prices was cause by a weather related shortage in two parts of the world. Australia and Russia had bad crops. Russia back to back bad crops. This created a world wide shortage of grain for protein. This drove prices up very fast, just a few months. Then you couple that price raise to ethanol production increases in the US and you really stress the demand for grains. So you have short term price increase caused by weather events world wide. Then the local farmers begin to think this is the "new" normal. They ramp up production rapidly. In a short time production exceed demand. The over production did not immediately show with lower prices because the world stocks need to refill. So we had several years of high prices for grain production. This year we saw the crash in grain prices. The response was to produce EVEN more grain. So I think we have not seen the bottom of the price decline in grains. People will have to switch production and I am not seeing that yet or at least not on a large scale.

This price drop is bleeding over into the livestock sector. Beef prices are down and milks has been down but came back a little bit. So your going to see increased production in milk. This may help increase income for a short while but not long term. There again it will take production being lowered for prices to come back. You will see more smaller dairies quit. It will be the highest cost producers that go out fastest. This usually is the smaller dairies. The economics of scale really mean a lot to the cost of milk production. The difference between a semi load of feed and a ton of feed can be 50% per ton. So if you can handle semi loads you have an advantage. Selling the milk too. If your only shipping a few thousand pounds of milk per day your not going to get the same price as the fellow shipping semi loads of milk each day. Many small producers around here have to pay a set stop fee to have their milk picked up because they do not have enough production to totally pay for the transport/pickup cost.

There is going to be a period of low prices in production agriculture right now. This will not be a short term thing either. It took years to happen so it will take years to swing back.

Get the Damed goverment out of crop management and let the good farmers of the USA do what they are best at. The goverments place in US agriculture is to market our produce world wide, NOT regulate and subsidise production, and control land use.

Loren

Dairy farming has got to be about the hardest job to try to do.

I was just talking to the wife about the economics of scale. I understand the privileges of buying in large quantity's. While the smaller customer has to buy at a larger price until they either go out or find something more affordable. And on and on it goes. Until there is only one large farm left, who buys somewhere else because they can get a better price elsewhere. So now the supplier has no business and asks what happened? Or how about the dairy that gets big enough to market their own milk and transport it themselves. I'll end the ramblings.

kickinbull. The local suppliers have already be bypassed by most larger livestock operations. An example. We feed gluten pellets. Directly from ADM we currently have them contracted at $105 per ton. A local fellow usually gets a load when we do. He ran out between loads. He bought a ton bagged from a local supplier. He gave $245 a ton. Maybe $40 dollars went into the cost of bagging. The rest ????

With the EU ending their supply managed Quota system , the EU has more than double milk production. Russia banned the importation of EU dairy products in retaliation for the stand that the EU took on the Russians in the Ukraine, thus forcing even more dairy out on to the world market . Mean while the EU heads in Brussels give Billions of Euros to cash strapped EU farmers to keep them from protesting in the streets. The world is a wash with milk , because governments like to have cheap food for their people , and create policies to arrive at this end . Politicians care only about getting elected , not about farmers. Where will this all end ? Hard to tell , but this is not a normal boom to bust cycle . This is globalization at it's worst. We are all racing each other to the bottom . I see a return to "protectionist" policies coming , just look how the UK has now voted to leave the EU. Britain was being plundered of it's industry , and overwhelmed with cheap imports from poorer EU nations. Sound familiar ?

This is why other parts of the world tell us farmers here in Canada to hold on to our supply management system for dear life. The government here doesn't subsidize us at all but they try and limit imports and the supply is controlled to match domestic demand. We're getting 15% less for our milk right now because of diafiltered milk being imported illegally but we're still for the most part hanging on and some are taking advantage of a lull in the industry and expanding quickly. I know many producers in non supply managed countries think our system is unfair and needs to be dismantled and have some of our domestic consumers thinking the same way but the system works and most countries that had it than gave it up deeply regret the change. Not trying to start a debate just my 2c worth or maybe I should say 5c because they abolished pennies here. Dwayne

Where was that? And gallons or pounds makes a big difference...eight-fold.

Most dairy farms have it pretty easy right now compared to those in my area. Not only are milk prices very low, but with the extreme drought the second crop of hay and forage is off about 90% and there is no third, so the dairy farmers are forced to spend money that they don't have to buy hay in from a distance. The state is predicting a lot of sell-offs despite 3 million in assistance that will go out soon. In my area probably two thirds will sell out. I have a friend who is the ninth generation on his farm in 211 years. He is trying to hang on but it is looking bleak.

Bruce what does EU stand for?, what did you come up with on your barn cleaner? Kenny from SC

philp, I feel I must correct you , Diafiltered milk is imported legally . It was not created before the North American Free trade deal was inked , there for there was no tariff. As a milk producer , you should read up on this topic , and why class 6 milk pricing was created. Bruce

I know supply management is a sore subject with many in the US but I think it may come down to that at some point. There really is no new frontier on the demand side to look forward to. The last milk processing plant in NYC closing this year is a microcosm for agriculture in general. Demand in a lot of instances has no place to go but down and couple that with a population that is decreasingly connected with agriculture because fewer people know somebody in the industry to care. I keep reading synthetic food is on the horizon (20-30 years out) and the way I see people order "food" at the convenience store/ gas station tells me taste and/or quality are not of the utmost importance tells me synthetic has a chance in its infancy. If I had to advise somebody about a career choice who is currently in grade school I would sadly be reluctant to advise them to pursue farming.

What years at Cornell??? I am also a graduate.

European Union

I know it is imported legally per say but it is still milk and used as milk in some cheese blends although milk is not supposed to be imported to be used in cheese production,more of a way to say well you can't import cars into the country but so long as you remove the wheels at the border well just call them "auto parts" and you can than bring them in. I'm sorry I worded my post the way I did but in a round about way they are not supposed to be legal which is why dfc and most of the opposition is trying so hard to push government to stop it.

Canadian government new better than try to stop it,they would not win the challenge . Dairy Farmers of Ontario new this, and came up with a solution , and that upset DFC. Now we can export this product too , as it is priced at world price. More work for World Trade lawyers, lol.

What really upsets me is that the displacement of Canadian protein lowers our blend price but the shortage of butter stocks triggers a quota increase with still a lower price.

That's right,kind of the same way they took advantage of us on milk destined for chocolate milk. Every drop of milk we sell that gets used for chocolate milk we get world price for it but it is still more expensive at the store level than white milk. No wonder it's promoted so heavily.

Discussion about it was on AgTalk (linked below). Article someone referred to was in Wall Street Journal.
Click here

(quoted from post at 21:16:23 10/23/16) With the EU ending their supply managed Quota system , the EU has more than double milk production. Russia banned the importation of EU dairy products in retaliation for the stand that the EU took on the Russians in the Ukraine, thus forcing even more dairy out on to the world market . Mean while the EU heads in Brussels give Billions of Euros to cash strapped EU farmers to keep them from protesting in the streets. The world is a wash with milk , because governments like to have cheap food for their people , and create policies to arrive at this end . Politicians care only about getting elected , not about farmers. Where will this all end ? Hard to tell , but this is not a normal boom to bust cycle . This is globalization at it's worst. We are all racing each other to the bottom . I see a return to "protectionist" policies coming , just look how the UK has now voted to leave the EU. Britain was being plundered of it's industry , and overwhelmed with cheap imports from poorer EU nations. Sound familiar ?

Click to expand...

Heck of a lot of truth in that Bruce. You can't establish a quota system and then abandon it and not expect real issues. Add in trade policies that artificially support one group over another...it ends up being a mess every time. Isolationism or protectionism, one or the other is coming, but they'll be fighting the globalist corporate system. I don't know who wins, certainly not the common man.