Milk returns fare better than other commodities

Farmgate Class I milk can fetch as much as 50 percent of retail price

By CAROL RYAN DUMAS

Capital Press

When it comes to their share of the consumer food dollar, dairy producers outshine producers of other commodities.

Food producers across the board have an average cut of 19 cents of that dollar, according to 2006 numbers from USDA.

The dairyman's share, on the other hand, is an average of 30 cents to 50 cents, said Todd Dittman, vice president of business development and analysis for Dairy Management Inc.

Class I fluid milk hovers in the 50 percent range, while Class III milk for cheese is closer to 30 percent. Butter falls between the two, and ice cream's lower end of the spectrum claims about 20 percent.

The biggest chunk of the food dollar in 2006 went to labor, 30.5 cents in 2006. Retailers' profits amounted to 4.5 cents in 2006. That same year, before the spike in fuel prices, transportation claimed only 4 cents.

The all-dairy share of the consumer food dollar is about 30 percent. That compares favorably with fruit at about 28 percent, vegetables at about 25 percent, fats and oils at about 17 percent before a spike in 2007 and 2008, and cereals and bakery at about 6 percent.

The farm share of the consumer dollar for milk amounts to about 85 cents a gallon at a commodity price of $9.75 per hundredweight, Dittman said.

"If you see $4 milk (gallon) at the grocery store, it is likely that the farmer is receiving around $20 a hundredweight," he said. "Milk producers don't always get 30 to 50 percent, that is just the way it has been working out."

The situation may be improving for dairymen. On Oct. 30, USDA estimated the all-milk price for October at $13.80 cwt., up 90 cents from September. The cost of feed to produce a hundredweight of milk was $6.76, leaving $7.04 -- the highest of the year -- for other costs and profits.

Staff writer Carol Ryan Dumas is based in Twin Falls. E-mail: crdumas@capitalpress.com.

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