California dairies get temporary price hike

Late is better than never, and something small is better than nothing at all.

Long after the worst has passed, and far too late to help those dairy families who have already gone out of business, California milk producers were granted a three-month “hardship” price increase in all five milk classes by the state’s Department of Food and Agriculture on December 16.

The increases which begin January 1, 2010, and end March 31 are largest for Class 1 products (35 cents per hundredweight) and smallest for manufactured dairy products (10 cents per hundredweight). Overall, they are estimated to translate into an average blend price increase of 15.5 cents per hundredweight.

January 2010, however, is light years after the fact when milk producers struggled with 20-year low milk prices during the first half of 2009 and forced some operations out of business. For all of 2010, milk prices are currently forecast to be at or above $15.

For the average California dairy (which last year produced just over 1.8 million pounds of milk per month), the temporary increase works out to $2,794 in extra income per month.

In making the announcement, the Department noted that the California dairy industry lost approximately $1.4 billion during the first nine months of 2009. By our calculations, the three-month temporary price increase will generate about $16 million in total additional income.