Prices Received by Dairy Farmers Down in 2015-16

Prices Received by Dairy Farmers Down in 2015-16

Over the past decade, farm-level prices for milk have been variable. In September 2014, the all-milk price (the average price received by dairy farmers) peaked at $25.70 per 100 pounds, or cwt (1 cwt is just under 12 gallons). A year later, dairy farmers were receiving $17.50 per cwt. By April 2016, the all-milk price was down to $15.00 per cwt. As of June 2016, USDA forecasts indicate that the all-milk price will average between $14.95 and $15.35 per cwt for 2016. Relatively low feed prices in 2015-16 have mitigated the impact of low milk prices on dairy farmers’ incomes. In October 2014, the dairy producer’s margin, or the difference between the all-milk price and ERS’s estimate of average feed costs per cwt of milk was $12.85. As the all-milk price started to fall, the estimated margin hit a low point of $4.14 in July 2015. It thereafter increased slightly to a value of $6.46 in December 2015. By contrast, during the previous downturn in milk prices in 2009-10, the margin reached a low of negative $0.15 in June 2009. This chart is from the ERS Amber Waves article, Processing and Marketing Blunt the Impact of Volatile Farm Prices on Retail Dairy Prices released on August 1, 2016.


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