News Story - As milk prices drop, dairy farmers struggle

Plummeting milk prices could cause dairies to shut their doors.  

The U.S. Department of Agriculture sets the price each month that dairy farmers will get paid for their manufacture-grade milk. With a lower demand, and milk being brought in from Europe, farmers are seeing this number continue to drop.

Knott Dairy, in Pullman, will be less affected than other national dairies, but not by much, said dairy director John Swain. Currently home to around 170 cows, Knott Dairy produces all the milk that goes to the creamery on campus, to create ice cream and the Cougar Gold cheese WSU is famous for.

The Knott Dairy is the only dairy within about 100 miles, said senior animal science and Spanish major Chris Blaschko, who works at the dairy. Also, since the dairy is here at the university, it is used mainly for education and experiments. Therefore it is not as influenced by national prices as much.

John Swain said that many dairies are closing right now as a result of two factors: record high costs of feed and record low costs of milk. 

In 2007 milk was priced at $19 for every 100 pounds of milk, but in the next month the price is projected at $10 for every 100 pounds of milk, said Joe Harrison, a professor in the Livestock Nutrient Management Program and dairy specialist at WSU-Puyallup.

“Milk prices were good last year, so there was high priced feed,” Swain said. “The prices are starting to come down, but there are a lot of high price commodities in the inventory.”

In fact, it is estimated that some states are going to see a decline of more than 10 percent in the number of dairies that they have, said WSU extension economist Shannon Neibergs.

“It is a really difficult time right now,” Harrison said.

Swain said that although the dairy business is constantly fluctuating, this is a new low. 

“In this business there are peaks and valleys,” he said. “It is about supply and demand. The cow numbers are increasing but with the economy the demand is down.”

He said that he hopes that none of the cows at Knott Dairy, but he does not know what will happen.

“Cows need to leave somewhere in the nation,” he said. “We hope it is not from us.”

Knott Dairy itself is split into two parts, said Blaschko said.

One part is the student-run dairy, completely operated by student volunteers, and the other is owned by the university, she said.

Blaschko said that although the impact is not incredible large for Knott Dairy, for other dairies, it is going to have a large affect.

“It is going to be huge,” Blaschko said. “It is going to be hard on a lot of farmers; they are going to have to be bought out because they can’t make money.”

This will end up having an affect on consumers, Blashko said.

“There will be less dairies producing milk, so the price of milk will go up,” Blaschko said.

While this problem is very clear at farms and dairies, it is not yet showing on supermarket shelves, Swain said. “It could be a while before students feel anything.”

Harrison said that shelf prices are much more static than the prices that farmers get paid. 

“Store prices are inelastic, they don’t bounce around like at dairies,” he said. “There is still milk on the shelf for now.”

He also said that if milk prices are down for long term, consumers could see more changes in the price of all dairy products, including milk and cheese.

“These changes are happening, but they are not immediately passed on to the consumer,” said Harrison.