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Low Milk Prices Will Test Farmers In 2016

Milk prices are expected to stay low this year according to officials. Forecasts say the average price per hundred pounds of milk in 2016 will be $15.59.

Fluctuating milk prices are a familiar story, but state agriculture officials say farmers are bracing for a year when prices will stay low. It’s quite a contrast to two years ago when the price farmers received for milk hit record highs.

Overall, in 2014 prices averaged $23.53 per hundred pounds of milk.

The 2015 average was $16.49.

This February, the 2016 milk price dipped to $14.57, 38 percent lower than the 2014 average.

Forecasts indicate prices will average $15.59 for 2016.

Production costs vary from farm to farm but Deputy Secretary of Agriculture Diane Bothfeld says prices are very close to the break-even point for many dairy operations.

Bothfeld says farmers will have to defer equipment purchases and draw less income to get through the year. Some will consider whether to stay in business as another planting season approaches.

“The next couple of months is a decision time for farmers,” she says.

Bothfeld says most Vermont farmers purchased the basic 'catastrophic' level of coverage under the recently established Dairy Farm Risk Management program. 

"The next couple of months is a decision time for farmers." — Deputy Secretary of Agriculture Diane Bothfeld

The program is designed to protect farms when feed costs are high and milk prices are low, but those factors have yet to trigger any coverage. Bothfeld says the factors affecting milk prices are much more complex and global than they once were.

She says the lifting of a milk production quota system in Europe and a Russian embargo on European Union dairy products are affecting the price Vermont farmers get for their milk.

“You used to be able to look at what was happening in the United States and come up with some ideas on what prices would do, but now it is so global,” she says.

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