Competition from foreign markets and struggles in the global economy are causing a drop in milk prices in Pennsylvania and across the United States.
The price for milk in 2014 was the highest in Pennsylvania history, but this year farmers are facing a 28 percent price drop. In Allegheny County, a gallon of milk currently costs a minimum of $3.70, compared to last November’s price of $4.36, as established by the Pennsylvania Milk Marketing Board.
Embargoes by Russia on U.S. food products, a failing Chinese economy and a booming dairy industry in New Zealand are the major contributors to U.S. dairy struggles, according to Penn State University agricultural economics professor Jim Dunn.
“I think this biggest factor is that China’s economy has slowed down and they’re not buying nearly as much milk,” Dunn said. “China has been the biggest dairy buyer in the world for the last couple of years and this year they have cut back their imports very dramatically.”
Dunn said China was able to do so because of large domestic inventories of powdered milk.
This is not good news for Pennsylvania farmers, who enjoyed a “dramatically higher” price for their product last year.
“All of those things that were going right last year aren’t going right this year,” Dunn said.
Craig Marburger, vice president of Marburger Farms Dairy, said media personalities, including Dr. Oz, have criticized milk as unhealthy, which has affected milk consumption, particularly in schools.
“The media coverage [of milk] has not given it a good view nutritionally for the kids,” Marburger said. “We’re losing a generation of milk drinkers at the schools. If you lose those you’re going to lose sales.”
Marburger said revenues for the dairy farm dropped around 18 to 20 percent in the past year.
While the price drop is hurting Pennsylvania farmers, California farmers have it much worse because of an ongoing drought, according to Dunn.
“They are really struggling out there,” he said. “A lack of water, very expensive feed, and hot weather is hard on the cows, too … so they’re just getting hammered.”
Despite the price difficulties Pennsylvania farmers face, Dunn is confident that the market will turn around—and soon—as the United States’ biggest dairy competitor, New Zealand, has a weaker currency and is susceptible to droughts.
“I think it will rebound,” Dunn said. “I expect that we’re going to be back to normal in a year or so.”