The costs of getting milk from dairy to supermarket rose sharply in the last year, crimping profits and threatening one of California’s key exports.
Corn, among the primary sources of feed for the country’s livestock, showed a considerable downturn in production across the U.S. The USDA released its World Agricultural and Supply Demand Estimates Report Wednesday, offering lowered projections for U.S. corn production. The agency’s expected 10,779 million bushels in August fell to 10,727 for September, a downgrade of 52 million bushels.
That helped push up feed costs in California by nearly 27 percent in the first quarter of 2012 during the period since this time last year. Producers now face a cost of $208 per one hundred pounds of milk, or hundredweight. The amount of money dairy farmers take in minus the sum they pay to feed livestock—“income over feed cost”—dropped about 36 percent.
“The increase has just been catastrophic,” Michael Marsh, chief executive of Western United Dairymen, said.