Dairy farmers say they have little choice but to sell part of their herds for slaughter because they face a perfect storm of destructive economic forces. At home, feed prices are rising and cash-strapped consumers are eating out less often. Abroad, the global recession has cut into demand for butter and cheese exported from the U.S.
Prices for milk now are about half what it costs farmers to produce the staple, and consumer prices are falling. Unless the market can be bolstered, industry officials project that more than 1.5 million of the nation's 9.3 million milking cows could be slaughtered this year as dairy operators look to cut costs and generate cash [Tracie Cone, "Dairy Cows Head for Slaughter as Milk Prices Sour," AP via Yahoo News, 2009.02.16].
(See? The capitalist system really does eat labor. Ungulates of the world, unite!)
The Tri-State Neighbor reports that milk prices for producers have dropped from $17–$18 per hundredweight last year to $10 per hundredweight right now. Walter Bones of Turner County Dairy says producers are losing three to four dollars per cow per day, and those losses have driven 30 South Dakota dairy farms to shut down just this year.
Cone reports that as of February 2, farmers were getting about 80 cents a gallon, while the California Department of Food and Agriculture estimates the total cost to produce a gallon of milk is $1.65. That's not a winning business model.
Of course, you'll notice that the industry and the grocers manage to make sure the farmers take the brunt of the price decline. Anyone paying half price for milk at Sunshine compared to last year? Anyone see cheese (or burgers, given the increased supply) dropping in price? I didn't think so.