Wednesday, June 06, 2007

Milk prices: do they deserve to be as high as oil?

The headline in the Oregonian newspaper was catchy. “Will milk prices become America’s new oil?”

What a way to kick off June as Dairy Month nationally: let’s stir in the fear factor for consumers.

According to the story, by sometime in June, “prices paid to farmers will have increased 50 percent this year.” The story added that retail milk prices have already gone up 3 percent, about a dime a gallon. Around the country, prices range from $2.76 a gallon in Dallas to $4.09 in New Orleans, said the story.

Why the increase? The Oregonian writer said it has been “driven by higher costs of transporting milk to market and increased demand to produce ethanol.” The amount of corn needed for ethanol is projected to rise 52 percent this year, resulting in 3.2 billion bushels for ethanol compared to the year before.

The story went on about how much the higher price for milk and milk products is affecting and hurting customers, consumers, and everyone else down the line from the dairy farm.

What was missing was putting into perspective what this really means to the dairy producers. Even though the cost of milk is going up, and prices paid to farmers may have increased, what is the profit margin on that milk? For a lot of milk producers, profits aren’t great in the milk business.

There are good and bad times, but there isn’t exactly a cow cartel, no bovine billionaires, no OPEC equivalent to set prices to gauge consumers. Although there’s a thought: Imagine OMEC: Organization of Milk Exporting Countries, or make up a new acronym completely: MOO …. Milk’s Omnipotent Organization…

Getting back to reality, the problem is that milk producers have for too long subsidized consumers. The hard working dairy owners in this country have sold milk for a ridiculously low price — because they were forced to accept such prices from others down the retail line — and spoiled consumers who pay for their products.

Should a gallon of milk cost more than a gallon of gas? Absolutely. It’s a food necessity for most people, and has high nutrition. Think about what a gallon of some of the sports drinks costs, or of name-brand pops, and then ask: doesn’t milk deserve to be higher priced for what it contributes to society? Absolutely.

There are a lot of families that dedicate their lives to run their dairy farms, and they care greatly about the cattle that provide them with a business that hopefully can be passed on to the next generation. The majority of dairy farms are smaller operations, not dairies with thousands of cows, and it’s the owners’ kids and grandkids that are helping to or will run these dairies some day.

Dairy farms invest a lot of money in communities, provide additional jobs, and are a market for the crops and hay grown by some of their neighbors.

The list could go on of why dairy farms should be supported, and why milk is worth every cent — and more — and why farmers deserve high prices paid directly into their pockets.

But the main point is, it’s time to get the message out before the all those price increases really hit the consumers this summer on those jugs of milk and packages of cheese.

By then, if the dairy community and others don’t explain and take control of the message going out in the media and counter the criticism on higher milk prices, what might be a small, irritable drop in the milk bucket for now could be a flood of complaints later — or worse.

The market could milk could potentially dry up.

At an Oregon Dairy Farmers annual meeting this past winter in Sunriver, Ore., dairy producers heard such a warning.

Blair Thompson, the Consumer Communications Manager at the Washington Dairy Products Commission, talked about how consumers are already concerned about milk, especially with their negative perceptions about the use of rBST.

Thompson said a survey of consumers in Washington state showed that the number of consumers who reduced or eliminated their dairy consumption is already up 48 percent since 1998.

As prices climb, the dairy industry needs to be prepared for the backlash based on price and continue to help people understand more about the industry.

It needs to go beyond just showing the images in TV ads of California cheese coming from “happy cows,” although these ads are so delightfully humorous.

Oregon Dairy Farmers has the right idea with some of the ads it released in the last few months allowing dairy farmers to describe a bit about their family farm business, why they farm and how they treat their cattle. The Dairy Farmers of Oregon website also does an excellent job, playing up that it’s “350 farm families working together to produce top quality dairy products, so you can enjoy healthy and delicious dairy foods.”

Hopefully, when this summer people need to make choices between buying a gallon of milk for their families or a gallon of gas for their vehicles, the milk will win the battle for the wallet.

Hopefully, when that time comes, the consumers will realize they are helping to support an American dairy farm, appreciate what those farmers have done, and acknowledge they definitely got their money’s worth — and more — of dairy products.

Blair Thompson audio
Dairy Farmers of Oregon
TV ads
Dairy Farmers of Washington
Washington Dairy Products Commission



threecollie said...

Thanks for this post Elaine! You said a mouthful!

Elaine Shein said...

Just thinking of all the dairy producers I know out there ... from here in the West to as far as New York state.
We always appreciate hearing from you.

Anonymous said...

great article, thanks

Anonymous said...

Communication with our costumers is always great. We need to tell everybody what we do. I'm proud we make a great beverage

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