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Discussion Boards > Active Subjects > Messages as Posted > Food Forum

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04-02-2009, 16:31

Post: 161662

AnnBrush

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Join Date: Mar 2004
Location: Troy OH
TractorPoint Premium Member -- 5 Tractors = Very Frequent Poster

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Milk

The farm gate price of milk has almost nothing to do with the retail price.

Farm price is essentially determined by supply and demand, high demand and limited supply = $19 / cwt like is was back in July last year, now its around $ 11 / cwt as demand has dropped off sharply and the cows are still producing - no one told them we are in a recession.

Retail is determined largely by costs associated in getting a gallon of milk from the farm gate to the store. Think transport (its one of the most costly goods to move around - akin to having to transport chilled water = refrigeration and weight issues), regulatory compliance (on somatic cell count, salmonella, testing for antibiotics etc), pasteurization (heat all that milk up to 170 °F then immediately chill it to 38°F), further processing (splitting into cream, 2%, 1%), standardization of product (adding vitamins which have to be bought), packaging, logistics, labor, inventory management, sanitization of bulk tankers and packaging material, cost of spoiled product.

All this and then most grocery stores sell milk at even price or as a loss leader.

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04-03-2009, 15:21

Post: 161694

AnnBrush

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Milk

Milk goat = ±7 lb/d milk, holstein = ±70 lb/d. The physical effort to milk each at least 2x daily is approximately the same as are the physical resources for a milking parlor (possibly slightly larger for a cow parlor). Assume the feed fed per lb milk produced is a wash (in actuality cows are more efficient converters of feed to milk), you would need significant additional revenue from the goat milk to make it worthwhile to milk goats. If everyone suddenly got into goat milk production you would expect the prices for your milk to plummet as demand was rapidly exceed by supply and goat milk would be a very price inelastic product.

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