Increase in Milk Prices in 2014, But Expect a Drop in 2015, Final
Monday, January 26th, 2015 -- 9:42 AM
-In 2014, farmers saw record setting milk prices, but experts say farmers should get ready for a swift decline in 2015.Ken Heiman, of Nasonville Dairy in Marshfield, explained what the world market may look like in 2015.
Ken said, "We were $2 and something high, when the world market was all the way down to a $1.40 a pound. Foreign countries will pay more money for cheese and milk products from the U.S. because of the standards that are expected of our dairy farmers, our dairy plants and the entire industry and the supervision there of. We can't cheat on it, not that it does in other parts of the world, but it may."
"They trust very much into the USDA and a lot of other things here, so they'll pay more for the product. What happened was, that we were so far out of whack going into the bidding in the beginning of the year, that, I'm going to pick on a couple people, the Irish Dairy Board and Fonterra from New Zealand, who were both in a position where they could offer prices that were not sustainable in this country. And they were able to garner more market."
"Everybody knows that the quota system in Europe is about to come off and so, now what you do? Now we're going to have to live with whatever they can come up, how much they come up. So, in New Zealand if they have rain, which they hadn't had for a couple years, they'll be able to put out a little bit more. But both of those countries, New Zealand exports about 92%-93% of their total production and Ireland has 86%. So, they're going to export a lot, they always have, and if they have more to export, that's what they're going to do."
"So, they were looking for more world market. And some people became fickle. Look at Russia. They decided dairy products weren't a necessity and they weren't going to buy and that's just what they're going to do. And that put the European market in a corner, so the European market was out looking to garner more market share of exports."
Due to over saturation and poor world markets, experts are expecting a drop in 2015 prices.
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