Active discussion on Holstein USA’s Dairy Price Stabilization Program

Responding to growing member concerns, Holstein USA has been becoming increasingly more active in milk marketing. Not only have they established a milk marketing committee, but that committee has developed a producer-led plan to stabilize milk prices. In recent months, the Association has been meeting with milk co-op leaders, national dairy industry leaders, and others who might help implement the plan.

Bob Cropp , the University of Wisconsin-Madison dairy economist who help develop the program after significant Holstein member input, was on hand June 29 at the National Holstein Convention in Sacramento, Calif., to detail the plan being proposed by Holstein USA to stabilize milk prices.

As he led the discussion, Cropp quickly pointed out that, “this is as depressed a dairy economy I have seen in my 42 years in the dairy industry,” he said. “At the heart of the issue is low pay prices for milk combined with high feed costs,” he said. Regionally, feed costs are running higher than average in many western states such as California, Idaho, and West Texas just to name a few, Cropp pointed out.

There are a number of reasons producer pay prices are down. Certainly the weakening world economy tops the list. Perhaps next on the list is the fact exports are dropping. In 2008, the U.S. exported 10.8 percent of our milk product. Exports are off significantly from that number due not only to reduced demand, but the fact major exporting countries like New Zealand and Australia are producing more milk, the European Union is subsidizing exports at a higher level, and the strengthening U.S. dollar is making our products more expensive to importing countries. All these factors may combine to drop exports 35 to 57 percent this year.