Newspaper article THE JOURNAL RECORD

1989 Could Bring Further Gains to Dairy Farmers By-and-Large

Newspaper article THE JOURNAL RECORD

1989 Could Bring Further Gains to Dairy Farmers By-and-Large

Article excerpt

WASHINGTON - Dairy farming can be a hit-or-miss occupation, particularly if drought wipes out home-grown forage and grain production, or the government tightens up on expensive price supports.

The fortunes of dairy farmers also can depend on geography. Some areas of the country have low feed costs. Some produce too little milk, while others wallow in dairy surpluses.

But by-and-large, the Agriculture Department and milk industry leaders say dairy farmers recently have been doing better financially and that 1989 could bring further gains.

Milk production in 1988 was a record of 145.5 billion pounds, up 2 percent from 1987, and total output could edge even higher this year, according to agency analysts.

Prices paid to dairy farmers have dropped from record marks of the early 1980s, reflecting cuts in federal supports and other attempts by Congress to whittle down huge surpluses of cheese, butter and non-fat dry milk, the products USDA buys to keep milk prices from sagging too much.

The big stockpiles were reduced sharply, but purchases rose again in 1988 and USDA and industry people are watching what may happen in 1989. Right now the situation looks fairly good.

Although the farm price of milk rose in the latter part of 1988, prices for the entire year averaged only $12.21 per 100 pounds, down from more than $12.50 in 1987. That is the wholesale price average for all milk sold by farmers nationally.

According to USDA records, it also was the lowest annual average since 1979 when the all-milk price was $12.02 per hundredweight. The record high was $13.77 in 1981, a level that was almost matched during the next couple of years.

The cash receipts from the sale of dairy products peaked at about $18.8 billion in 1983. Last year, according to USDA's current estimates, cash receipts, or gross sales, were about $17.3 billion, the lowest since 1980.

There's a lot of uncertainty about 1989, but USDA economists say dairy receipts could edge up somewhat to around $17.5 billion. But, officially, the department's forecast is in the range of $15 billion to $20 billion.

Do the lower prices of recent years mean the U.S. dairy industry is on the rocks? Not necessarily, say USDA and industry officials.

``The dairy industry starts 1989 with a balanced and healthy national milk supply,'' says Jim Barr, chief executive officer of the National Milk Producers Federation.

Barr cites USDA's own figures showing that commercial demand for dairy products continues to increase and that the size of the U.S. dairy herd is smaller than it was a year ago. All of this indicates stability, he says.

In 1988, the department's Commodity Credit Corp. bought the equivalent of 8.9 billion pounds of milk in the form of cheese, butter and non-fat dry milk to support the prices paid to dairy farmers. …

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