Whittaker's farm makes paper again

Prices paid to dairy farmers drop
Consumers may pay less for milk

BY MY-LY NGUYEN
Press & Sun-Bulletin

Binghamton-area dairy lovers may eventually see lower grocery bills as the surge in milk prices loses steam.

The national average farm-level price of milk -- or the amount farmers receive for the calcium-rich commodity -- has fallen about 28 cents per gallon from July to August, according to the U.S. Department of Agriculture. Prices paid to farmers have dropped about 54 cents per gallon since June, when they reached record highs for the year.

As farm-level prices continue to retreat for the second consecutive month, consumers nationwide may end up paying less for milk at groceries and other retail outlets, reports the National Milk Producers Federation. The Arlington, Va.-based organization represents the nation's dairy farmers.

"It's outrageous how prices have skyrocketed," said Elliot Dixon, a 21-year-old from Endwell who uses about a gallon of 2 percent milk each week. "Milk's an essential thing for cereal, oatmeal, cooking and drinking. It'd be great if prices went back down."

Lower retail milk prices put more money in consumers' wallets, but they also mean less profits for dairy farmers who rely on the money to maintain their operations.

"Trying to balance your budget on 1970 prices of milk when you've got 2004 expenses is extremely difficult," said Judi Whittaker, who helps run the Whittaker dairy farm in Nanticoke.

Recent increases in farm-level milk prices helped dairy farmers like Whittaker recover from two years of extremely low payments for their products.

Now that farm-level prices are declining, Whittaker said she'll be keeping an even closer eye on the farm's finances.

"It's the nature of the business," she said. "You've just got to hope you've got your financials in line to ride it out."

Farmers typically receive only 30 cents for every dollar that consumers spend on dairy products, Milk Producers Federation President and Chief Executive Jerry Kozak said.

"We're hoping that prices don't sink back down to the record low levels of 2003," he said. "Many farmers can't take another stint of the 25-year lows like we had last year."

While it's reasonable to expect retail milk prices will start to fall, it's unclear when that time will come.

"We're hoping that retailers who quickly passed their higher input costs on to consumers this spring will be equally responsive as prices drop back down," Kozak said.

The price increases were largely the result of tight milk supplies, he said.

After two years of extremely low milk prices, many farmers chose to leave the dairy business or reduce their milk production, according to the federation.

As the number of cows decreased and milk supplies tightened, prices rose for farmers and consumers.

Binghamton-area consumers saw the price for a gallon of whole milk increase about 15 percent from May to July, according to the state Department of Agriculture & Markets.

"Our cost for milk has come down," Rochester-based Wegmans spokeswoman Jo Natale said. "It's hard to know what the future will bring, but we anticipate our costs may stay lower for a time."

Whittaker said consumers probably won't see retail milk prices drop immediately.

"It's just like gas prices," she said. "You never see them drop as quickly as they go up."