Dairy prices are decreasing in the Midwest due to a steady 4 to 5% increase in product paired with a 3% increase in consumer demand. During the months of May through July, farmers are having to discard portions of their dairy because they don’t have the capacity to process all the milk.
“The last four or five years, we've been adding a lot of cows to the nation's herd and so we're starting to see that spring flush of milk on a yearly basis which causes prices to decrease,” Darin Von Ruden, president of Wisconsin’s Farmers Union, said.
Dairy farmers across the country are receiving $17-$20 for every 100 pounds (six gallons) of milk they produce, Ruden said.
This directly affects how much a consumer will pay because consumer pricing is calculated by dividing six into the price farmers receive. Then taxes and fees are added to equal the consumer cost.
Dairy prices are low right now because the number of cows in the nation’s herd is quite large, which results in a 4-5% increase in milk production, Ruden said.
Even with the 3% yearly increase in consumer consumption, more milk is being produced than there is a demand for, resulting in excess milk.
“A lot of the extra milk goes into different products, whether it's cheeses or butters, it usually ends up in the consumer,” Ruden said.
However, milk is still being discarded because at the farm level, the farmers don’t have the capacity to process all of it.
Ruden mentioned that this isn’t a new trend and for the past five or more years, this is what dairy farmers are seeing during the springtime.
He predicts within the next three to six months, there will be an increase in prices as farmers start to sell off some of their low producing cows to lessen the nation’s herd.
To reduce the amount of waste that farmers have to create with the unprocessed milk, Ruden urges consumers to continue buying dairy products.