Farm-level milk prices drop 28 cents per gallon; retail prices should follow


ARLINGTON, Va. – For the second month in a row, the farm-level price for bottled milk dropped significantly as of Aug. 1, falling 28 cents from July, and a 56 cents from June.

At $1.48 per gallon, the wholesale bottled milk price for August is down 27 percent from the record high hit in June. And, it’s expected that the prices consumers see at the grocery should follow.

“When it comes to milk prices, ‘what goes up, must come down,'” said Jerry Kozak, president and CEO of the National Milk Producers.

“We’re hoping that retailers who quickly passed their higher input costs on to consumers this spring will be equally responsive as prices drop back down.”

Temporary? Kozak said that while both farm- and retail-level dairy prices hit records this year, the surge at the farm level, at least, will be short lived.

“We are hoping that prices don’t sink back down to the record low levels of 2003. Many farmers can’t take another stint of the 25-year lows like we had last year.”

Behind the moves. This past spring’s price increases were largely the result of tight milk supplies, Kozak said.

After two years of extremely low milk prices, many farmers chose to leave the dairy business or reduce their milk production. As the number of cows fell, and milk supplies tightened, prices rose at both the farm gate and grocery shelf.

Three months of high prices, however, have encouraged farmers to add cows and increase production.

The number of cows being milked across the country has been rising since May and, with a bumper corn crop forecast and lower dairy feed costs expected, production and prices are expected to moderate for the remainder of the year.

Kozak added that farmers typically receive only 30 cents for every dollar that consumers spend on dairy products, and the farm share has been steadily shrinking over time.


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