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Prices Depend on Increasing Demand

June 3, 2013
 
 

Nick Vande Weerd

Nick Vande Weerd
Brookings, S.D.

The Vande Weerd family is majority owner and manager of Pleasant Dutch Dairy, which milks 1,400 Holsteins.

 

 


Consumption of dairy products directly affects farm prices. If demand of dairy products can be increased, then farm prices will increase.

Increasing demand has not always been easy in the dairy industry. Since the 1970s, U.S. per-capita fluid milk consumption has been declining. Fortunately, during the same period, cheese and yogurt consumption have been increasing. In addition, we have been finding success in growing the amount of dairy products we export.

We should continue to grow the market place for products that are flying off the shelves and grow our export market share. But we should also continue to find ways to market fluid milk. That’s not only because increasing demand for fluid milk will be beneficial for the dairy industry, but mainly because fluid milk is healthier for the consumer than soft drinks.

Sadly, we have lost major ground against the soft drink industry, but I feel they have proven one cold, hard fact: Convenience and marketing trumps all. The milk industry needs to continue to make its products convenient for the end user.

In addition, the milk industry should continue to market to the different segments of consumers. Launch specific marketing campaigns aimed at kids, mothers and young adults. Lastly, we as dairy producers should always be making time to educate those who are not in the industry about the quality products we produce.

On the bright side, while we may have lost ground in fluid sales, we have been successful at increasing cheese and yogurt consumption. We should continue to market to consumers and continue to drive consumption up. If we let cheese and yogurt sales tamper off, we would see a reduction in farm prices.

Not only have cheese and yogurt sales helped clear the dairy industry shelves but exports have also removed product from the pipeline. I feel anything we can do to clear product from inventory has been a good thing for the dairy industry. We should continue to push for more global market share, which will not only help feed the world but also have a positive effect on the U.S. dairy industry.

The bottom line has been if we can find ways to increase demand for milk products, we will increase the milk price at the farm level. Unfortunately, if we allow milk products to get pushed out of the marketplace, farm-level milk prices will suffer. We need to work together as an industry to assure that demand for milk products increases and consumers are educated about the safe and wholesome products dairy farmers produce.

Vande Weerd’s recent prices

Milk
$20.49 (3.8 bf, 3.05 prt)

Cull cows
$65-$75/cwt.

Springing heifers
$1,300-$1,700/head

Alfalfa hay (milk cow)
$280-$350/ton

Cottonseed
$361/ton

Ground corn
$6.75/bu.

Soybean meal
$405/ton
 

 

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