Hoard's talks to National Public Radio

Today's dire situation in the dairy industry is a result of a "perfect storm" of circumstances. That's the message the Hoard's Dairyman staff gave NPR reporter John Burnett.
On average, dairy farm families across the nation are experiencing a 50 percent drop in income from roughly $20 per hundredweight or $1.72 a gallon down to $10 per hundredweight or 86 cents a gallon. The low prices have been caused by growing dairy product inventories in the U.S. and around the world. China is importing significantly fewer dairy products in the wake of that nation's melamine scandal. Dairy product importers around the globe can't get credit to import products.
New Zealand, which exports 90 percent of its dairy products, is having trouble finding enough warehouse space for surplus product. Some of the New Zealand surplus is finding its way to the U.S. Recent butterfat imports here are the highest in four years. The European Union just announced that it, again, is going to subsidize exports of dairy products, which will put further pressure on world prices.
Dairy product use in the U.S. is down as people are eating out less and choosing lower cost items (with less cheese) when they do eat out. Pizza makers are cutting back on the amount of cheese they use.
Dairy farmers' biggest costs, Hoard's pointed out, are feed and labor. But there isn't a lot of "wiggle room" on those expenses. Regardless of the price received for milk, cows still must be well fed and well cared for every day.