Oversupply Of Milk Continues To Erode Farmers' Bottom Line

Feb 19, 2019

By Hope Kirwan

Increased trucking costs for Wisconsin dairy farmers is the latest symptom of an oversupply of milk.

The Upper Midwest Federal Milk Marketing Order recently released a report on milk hauling charges paid by farmers in 2018.

The report found the average charge per hundredweight, or 100 pounds of milk, in Wisconsin was $0.24, a 40 percent increase from 2017.

Corey Freije is an agricultural economist who compiles the report for the Upper Midwest Order. He said hauling charges typically increase by 1 or 2 cents every year, so last year’s 7 cent jump is unusual.

"That is partially a result of an increase in the diesel fuel costs," Freije said. "But it also seems to be an indication that the dairy farmers, with the supply that’s out there, have kind of lost their market power."

With plenty of milk to go around, Freije said dairy processors don't have to subsidize the cost of hauling milk as a way to attract farmers.

"The handler, particularly a co-op, would subsidize that hauling (charge)," Freije said. "I've heard over time that the handlers and some of the co-ops want to reflect more fully the cost of the hauling to those deductions for dairy farmers."

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