SACRAMENTO, Calif. — Farm milk prices paid to dairy farmers in California — who supply about 20% of the nation's milk — will drop 35.3% in February, from $1.50 to 97 cents per gallon. In California, minimum farm gate milk prices are set by the state's Department of Food and Agriculture, based on recent dairy futures trades on the Chicago Mercantile Exchange, and these prices are the lowest the state's farmers have seen in 30 years, according to the CDFA.
“This is an extremely difficult situation for dairy farmers,” Steve Lyle, spokesman for the CDFA, told SN.
“While the farm gate price is the lowest in 30 years, production costs are much higher than they were then. CDFA is working on a letter to the incoming U.S. Department of Agriculture secretary urging a streamlining of funding programs that could provide some assistance.”
Michael Marsh, chief executive officer of Western United Dairymen, Modesto, Calif., said that the combination of low farm prices and stubbornly high fuel and feed costs may force many dairy producers out of the industry.
“We've heard from some dairy producers that this is the straw that's broken the camel's back,” Marsh told SN.
“About 60% of dairy products go into foodservice, and with people not going out to restaurants or buying pizza, it impacts [demand],” he added.
“On the flip side, consumers will see a boon from this, in that they should have dramatically lower prices as of Feb. 1.”