By April Reese
and John
Harrell
University of Georgia
Shoppers should continue to find good milk prices in grocery
stores into next year. University of Georgia agricultural
economist Bill Thomas says retail milk prices have changed little
from 2001.
“Milk prices at the producer level are down a record amount
for a one-year drop,” said Thomas, a professor with the UGA
College of Agricultural and Environmental Sciences. “But there is
not a direct connection between producer prices and consumer
prices.”
Grocery shoppers did enjoy a drop in milk prices this
year. “The average price of a gallon of milk was $2.89 in 2001
and dropped to $2.72 in 2002,” Thomas said.
Cheese prices up
However, the prices of other dairy products, like cheese, have
increased over the past year.
“Cheese is the fastest-growing dairy product,” Thomas
said. “It seems like everyone is eating cheese when they go out,
on pizza, salads or tacos.”
A pound of cheese last year cost shoppers $3.73, a price now
up to $3.89, he said. Consumers should expect a slight increase,
1 percent to 2 percent, in dairy product prices for 2003.
Farmers’ prices not so good
While consumer dairy products remain stable, dairy farmers
have had a record low year, forcing many farmers to rely on
government programs.
“Dairy farmers had a number of good years between 1996 and
2002, but demand slipped off in 2001, causing supply to be much
greater,” Thomas said. “Prices stay depressed because we have so
much stocked up.”
Help from the government in the form of Milk Income Loss Farm
Acts and contracts provides much-needed aid to dairies.
“Government programs have stepped in to help our dairy farmers
and will be welcomed by the industry,” Thomas said. “Prices are
still well below a profitable level.”
Help on the way
A little help is on its way. After the stocks are used up,
demand and supply will equal out, he said, providing a break for
farmers.
“Next year, we expect prices to rise a little in favor of the
farmer, but not up to the price they received in 2001,” Thomas
said. “Milk prices have been low, and now feed prices are rising,
due to the drought, putting pressure on the farmer.”
Most dairy farmers have signed up for government programs,
such as the Milk Income Loss Contract Program, he said. This
program offers direct payments to the farmers from the government
as milk prices are low.
Once the price of milk rises, the payments will dry up. The
Livestock Compensation Program is designed to help farmers in
counties hurt by the drought. All counties in Georgia have been
suggested for the program, but only 20 are now approved.
