ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Friday, August 30, 1996 TAG: 9608300035
SECTION: BUSINESS PAGE: A-11 EDITION: METRO
SOURCE: Associated Press
Milk production in Virginia is expected to decline by 8 percent this year to the lowest level since 1975, while prices paid to dairy farmers and by consumers increase.
The main cause is record-high grain costs. Farmers have been sending cows out to pasture rather than feeding them grain.
With less grain to supplement their grass diet, cows produce less milk. With the milk supply low this year and demand stable, the price increases.
But the state Milk Commission's administrator and a dairy science professor said Thursday in Roanoke that the fluctuations also are a sign of the times.
The 1996 farm bill moved the agriculture industry further into a free-market system, without the safety net of subsidies and surplus stocks that used to stabilize supply and demand.
``You're going to see a much wider swing in prices of foods now,'' said Bob James, an associate professor at Virginia Tech.
The state Milk Commission sets the price that wholesalers pay dairy farmers for their milk and keeps track of prices generally paid by consumers.
``Farmers, producers and consumers have been accustomed to a stable market,'' Milk Commission Administrator Rodney Phillips said. ``You usually don't see a wide variation in milk prices in the store.''
The retail price of milk increased to $2.44 a gallon in May after holding steady at $2.39 cents per gallon for the previous four years, according to product surveys in the eastern region of the state. The commission estimates that the milk price will jump to $2.59 cents a gallon in September, an 8 percent increase from the beginning of the year.
Milk production was 1.05 billion pounds through July and is expected to reach 1.8 billion by year's end, down from 1.95 billion last year.
LENGTH: Short : 40 linesby CNB