The cost of production must be included in the pay price of milk.
After receiving a pay price of $26.92 for their milk in June 2022, many dairy farmers thought that possibly the prices had really turned the corner. However, thousands of these same farmers also had a large sum of money taken from their milk checks by their dairies.
Before the dairy farmers received their milk checks, many of them had at least $3 per cwt. (hundred pounds of milk) taken from them. Others claim they had at least $4 per cwt. removed from their checks.
However, dairy farmers claim that the starting price of their February check was $20.75 per cwt. This is a tremendous drop from June 2022.
Dairy farmers also claim that the take-out from their milk checks was substantial. That includes an unknown amount taken out by the USDA for marketing costs.
It’s time that some people with some authority pay attention to the finances that dairy farmers are facing. I’m talking mainly about the average cost of production facing dairy farmers.
So many claim that their total cost of production is continually rising.
But if you use the national average cost of production—$28.50—from the USDA, in June 2022 dairy farmers were receiving $1.58 per cwt. below their cost.
Remember, in February, the pay price was $20.75 per cwt. This means the take-out from the average milk check is $7.75 below the national average cost of producing milk.
A staunch member of Pro-Ag keeps reminding me of the total cost to our dairy farmers for the last several years. We also carry signs with us illustrating the billions of dollars of losses experienced by area dairy farmers.
Many consumers ask us how dairy farmers can continue to sustain these losses and stay in business.
The answer is simple—many of these dairy farmers no longer exist. Currently, Congress is considering placing “the higher of” in the pricing of Class I milk. This amount will fall way short of the needs of all dairy farmers.
The question is why everyone is pushing to change the Class I formula and do nothing about pricing the other 70 percent of milk correctly? Everyone in business must be able to cover their cost in order to continue to operate.
Federal milk hearings will soon be held, but they will not remedy the dairy farmers’ dilemma. If dairy farmers are to survive, then a new pricing formula based on the national average cost of production must be developed in order to allow dairy farmers to stay in business.
Some of us have been advocating for including the cost of production in the pricing formula for many years. If dairy farmers don’t push for it, and they continue on the same path, then don’t blame us for the dilemma.
Arden Tewksbury is the manager of Pro-Ag. The group can be reached at 570/833-5776.
