Disorderly Marketing in the Twenty-First Century U.S. Dairy Industry

Dairy farmers across the United States are dealing with financial stress from several consecutive years of low farm milk prices. Farm stress has been exacerbated in traditional dairy-producing regions in the Midwest and Northeast by a relative lack of dairy-processing capacity, which has led to disappearing farm premiums, increased milk hauling and marketing costs, and—in some periods—dumping milk that has no better marketing outlet.Michigan, part of the Mideast order, has been averaging farm milk prices of $1–$1.50/cwt below their historic relationship to U.S. and surrounding state prices. In the past couple of years Michigan farm milk prices have been among the lowest in the United States. The resulting financial stress has increased the exit of dairy farms and recently, in 2018, resulted in slowing state milk production. In New York, which is in the Northeast order, some farmers have been left without any market alternative and have exited. For other farmers, it was more or less business as usual, although with lower or no market premiums. Members of the cooperative that were left with the primary chore of balancing the market saw lower farm milk prices, similar to the Michigan experience. Of course, this also occurred during a period in which market prices for milk were generally below average and resulted in historically low returns for many farmers.