Wednesday, September 12, 2007

Milk Prices

According to this NYT piece:
Driven by a combination of climate change, trade policies and competition for cattle feed from biofuel producers, global milk prices have doubled over the last two years. In parts of the United States, milk is more expensive than gasoline. There are reports of cows being stolen from Wisconsin dairy farms.

I've heard as little as a few years ago, all dairy farms in Wisconsin were cash flow negative. I guess this means things have turned around.

For an interesting look into the economics of the dairy industry read this fedgazette piece which covers the price problems of 2002-2003. And this piece discusses the economies of scale disadvantage most Wisconsin farms face.
Technological advances in dairy production—from automated milking parlors to computer systems and management protocols—have dramatically increased dairy productivity, the number of pounds of milk a cow can produce. The average cow can produce four times more milk today than in 1930. But those technologies are most economical on large-scale operations, and small farmers have been unable or unwilling to grow large enough to incorporate them. A 1998 Minnesota State Colleges and Universities analysis of Minnesota dairy farms found that small dairy herds (under 100 head) averaged 17,699 pounds of milk per cow per year, whereas cows in large herds (300+) produced 21,284 pounds.

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