Girl pouring milk into glass.
July 3, 2018

Floundering Fluid Sales Are Hurting Northeast Milk Prices

 |  By: Jim Dickrell

Month after month, year after year, fluid milk consumption continues to decline. And that’s affecting your bottom line.

 

Dairy farmers in Federal Milk Marketing Orders with high Class I utilizations are feeling the pain most acutely. But because these changes are subtle, the erosion of Class I sales might not be that apparent.

 

Producers in both Mideast Federal Order 33 and Northeast Federal Order 1 are being impacted. “Pennsylvania has essentially lost 15% utilization in Class I over the last seven years, approaching the national average,” says Rod Goodling, an Extension associate in the Department of Animal Science at Pennsylvania State University.

 

Here’s the problem: “With relatively constant Class II and III utilization, the Class I loss has gone to Class IV, resulting in weaker than normal prices in Pennsylvania,” he says. Explanation: Class IV is typically the lowest priced class, resulting in the lower blend price.

 

“As this price shift continues, dairy operations will need to be strategic in reducing their cost of production to be more competitive in a non-Class I environment,” he says.

 

Below are price charts of Class utilization for the Mideast Order 33. It illustrates the erosion of Class I sales since 2010.

 

Mideast Class Utilizations.

 

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