THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Friday, August 30, 1996 TAG: 9608300552
SECTION: LOCAL PAGE: B7 EDITION: FINAL
SOURCE: ASSOCIATED PRESS
DATELINE: ROANOKE LENGTH: 44 lines
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. But the state Milk Commission's administrator and a dairy science professor said Thursday 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.
``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 per gallon for the previous four years, according to product surveys in eastern Virginia. The commission estimates that the milk price will jump to $2.59 a gallon in September, an 8 percent increase from the beginning of the year. Milk prices also posted similar increases in the Western and Southern regions.
Milk prices paid to dairy farmers in Virginia have changed little in the past decade, while annual production has ranged from 1.92 billion pounds to 2.1 billion pounds.
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.
Milk production in 1975 was 1.75 billion, with 1.03 billion pounds produced in the first seven months.
The state also has never experienced such a steep increase in the cost of feeding dairy cows. Farmers paid about $2.50 a bushel for corn last year and $6.00 a bushel this year. So they have been sending the cows out to pasture more often rather than feeding them grain. ILLUSTRATION: HOW IT WORKS
The state Milk Commission sets the price that wholesalers pay
dairy farmers for their milk and keeps track of prices generally
paid by consumers. by CNB