Milk Prices Up, But Increased Costs Still Hurting Farmers
For American dairy farmers the price they get for milk and have to pay for other products tends to be controlled by events happening in the world, such as a global pandemic or a conflict in certain countries.
While this might make the price of milk increase, prices of other inputs that farmers need to buy to produce milk also increase, making farmers — including those in Chautauqua County — struggle.
Inflation is controlled by the market that it is part of, according to Camila Lage, dairy management specialist at Cornell Cooperative Extension. For milk, the price increases when there is a supply chain disruption.
“If you have something that is not necessarily available the price will increase,” Lage said. “The price of milk has become so high since the pandemic because of the supply chain being disrupted. It’s similar to the car industry, where there are less parts available so now the prices of those parts have increased. Now that the pandemic is starting to slow, there is an increase in the amount of people buying things. The market has not fully recovered to be able to meet the increase in demand.”
During the pandemic many farms had to sell some of their cows or shut down completely, reducing the supply of milk and leading to the current inflation.
Additionally, Lage said the ongoing conflict between Russia and Ukraine has caused another supply chain disruption, specifically in grain and fertilizer.
“For farmers, even though the price of milk has increased, so has the cost of everything needed to produce milk,” Lage said. “Even with the shrink on the milk supply and there not being the same amount of milk in the market, which has led to a 40% increase in the price, a good chunk of what the farmers are getting has been taken out because of the price of other things. They’re being paid more but not necessarily getting more. The market is very unstable.”
Locally, this unstable market has caused struggles for some dairy farmers.
Paul Starceski of Sherman noted that while the price is better than before, farmers can hardly tell.
“We are getting a significantly better price right now than we have for a while,” Starceski said. “This is being offset by the price we have to pay for grain and crops, so we’re not feeling it. The price of fuel is almost double and so is the price of urea. It’s putting a squeeze on us.”
For Ben Nickerson, also of Sherman, the increase in milk prices is a relief, even with the additional struggles.
“We have had quite a few years of low milk prices where we’ve seen a lot of farms struggling,” Nickerson said. “It’s really been an uphill battle and the last couple of years, with the pandemic, things have been impacted even further. It is a welcome relief on our farm, where we milk around 850, that we’re seeing an upward trend with milk prices right now. With costs of things like fuel, fertilizer and grains soaring now as well, it’s really just enough for most of us to keep things moving along without falling further behind.”
Nickerson called for an update on how milk is priced in the market.
“Milk pricing as a whole needs a complete overhaul for the volatility we tend to cycle through to come to an end,” Nickerson said. “Farmers don’t get to set the price we sell our products at, so we need to be able to count on a system that works more fairly and effectively when things happen around the world that impact the industry as a whole, like we are seeing now.”
And while the struggle continues, Lage said dairy farmers should take this time to look at their finances and know their numbers.
“Producers should know the amounts they are paying and receiving,” Lage said. “Be mindful of your expenses. You can take the time to negotiate a good contract on the feed side and to find ways to be more efficient with the money you have to spend on inputs. Talk to your financial advisors.”
Also, Lage added that farmers are allowed to be excited about the high price of milk, but cautious as well because the market can and does change quickly, and that they should focus on their own operations and not necessarily the situations of the world.
“Farmers should always try to be more efficient,” Lage said. “Make the best out of your operation and don’t depend on situations that are happening outside of your own farm. You cannot manage what you don’t measure. Independent on milk prices, farmers should focus on what they can control to achieve optimal performance and efficiency and guarantee a good margin on their milk prices.”