Why Higher Dairy Prices Would be a Good Thing
Delaney Ripp
Spring of 2020 introduced a number of unexpected changes. The outbreak of Covid-19 caused most schools, sport venues, and restaurants to close for several months. These shutdowns were detrimental to the pride of Wisconsin: the dairy industry. Without a high demand for common goods like milk, butter, and cheese, sales dropped, and dairy farmers suffered. Milwaukee Journal Sentinel shared a video of a farmer explaining the fluctuating milk prices. The farmer shared that even before the pandemic, the dairy industry faced growing operation costs without a milk price increase to balance it out. Increasing the price of dairy products would have a positive impact on the dairy industry, and the farmers that keep it alive.
If the price of dairy products increases, then more dairy farms will be able to stay afloat. Low prices became a threat after the implementation of technology that maximized milk production. The result was an oversupply of dairy products and a high cost of production. While the dairy product supply curve shifted right, prices dropped. The average net income for dairy farms became unsustainable. Figure one demonstrates that the average net income for dairy farms was below zero most years between 2005-2018. Small farms couldn’t endure the years of minimal profit- many were forced to shut down. Figure 2 shows the increase of milk produced per cow paired with the decreasing number of dairy operations. New technology produced more efficient dairy farming, resulting in a greater supply of dairy at a lower price. If farmers continue to receive low payments for dairy products, then more small farms will have to shut down.
The idea of dairy farms shutting down may not elicit much concern. However, the dairy industry has an important role in our economy. According to an article by National Farmers Union, “The industry also creates nearly 3 million U.S. jobs that generate around $159 billion in wages” Small farms shutting down can be harmful to employment in rural areas that depend on dairy farms to provide job opportunities. Outside of small towns, the dairy industry contributes to 1% of the U.S. GDP, with an economic impact of roughly $628 billion (3). Keeping the dairy industry alive would reflect positively on our economy. Because of this industry’s impact on employment and the economy in general, it would be beneficial to increase the price of dairy products to keep the industry afloat.
Link to video:
https://www.jsonline.com/videos/news/2020/07/07/farmer-explains-fluctuation-milk-prices/53922 57002/
Works Cited
“IDFA Quantifies Economic Impact of Dairy – and It's a Powerful Picture.” IDFA, 19 Mar. 2020,
www.idfa.org/news/idfa-quantifies-economic-impact-of-dairy-and-it-s-a-powerful-pi cture.
Jsonline.com. 2020. Milwaukee Journal Sentinel. [online] Available at:
<https://www.jsonline.com/story/money/2020/07/08/milk-prices-surge-supportin g-dairy-farms-during-covid-19-pandemic/5392031002/>.
Nancy Scott, et al. “It's Time to Reform the U.S. Dairy Industry.” National Farmers Union, 21 June 2019, nfu.org/2019/06/18/its-time-to-reform-the-u-s-dairy-industry/.
It’ll be interesting to see where the price of dairy products goes. I wonder if consumers would actually be willing to pay more, knowing that they’re helping small businesses. Even something with a label identifying that they’re buying small. Usually the small business label attracts me to a product, so even after prices stabilize, I’d hope that people would continue to buy from smaller farms, but I think they’d rather buy from a bigger corporation if the prices are lower.
ReplyDeleteThese points really go in depth and open my eyes to the impact that even the seemingly most common or disregarded things make on our economy. A gallon of milk is very cheap, and even a slight increase could make large changes. How much do you think it should increase by? Right now, the average gallon of milk is $3.27. Would an increase to $4 be enough? Or would the price need to jump to $5 to make a significant enough impact? Then arises the issue of low income families or individuals struggling to pay for goods that were once much cheaper, though $5 is still very cheap.
ReplyDeleteI had never thought about how the pandemic would affect dairy farmers, but the more and more I think about it, the more I agree with you, and reading your evidence helps back that up. As you said, the net average income for dairy farmers most years between 2005-2018 was below zero. Dairy farmers already get paid next to none, while working an extremely difficult job, which is why many dairy farms started shutting down even before the pandemic. Now, after the pandemic, with the demand of dairy products going down, many small dairy farms will be forced to shut down, as they will have no other option. So I agree, we need to up the prices of dairy products, which in the end is totally worth it to keep all of the dairy farms up, and to keep our economy booming, as it plays such a pivotal role in our economy (making up about 1% of the U.S.’s GDP.)
ReplyDeleteThis is such an interesting topic to talk about and reference. I feel as if us Americans are taking things like this for granted. Sure, we are aware of everything mainstream that the COVID-19 Pandemic has caused for our country, but if we just took some time to dive deeper into the reality of industries like the farming and dairy industry, we would begin to realize the immense support that these industries need to receive. Its industries like these have significant effects on the economy, and yet they still go unnoticed and undersupported. From a worker perspective in these industries, I would expect some kind of support, whether it's from a price increase standpoint or a government support standpoint, these people need something to keep them afloat. If it wasn’t already clear enough, the COVID-19 Pandemic has and will have a tremendously negative short term and long term impact on our country and economy, and support from both individuals and the government is what it’s going to take to keep us going and rejuvenate our society.
ReplyDeleteI agree with increasing the cost of milk to keep these big dairy farms in business. However since there was an over produced amount of milk because of all this new technology. Wouldn’t milk get over produced again? Since increasing milk prices would keep multiple farms afloat in the milk industry with all this new technology making loads of milk with ease. Wouldn’t it become overwhelming and they’d probably bring the prices down due to the overproduction. The milk prices would then just fluctuate between high and low prices based on how much milk is being produced.
ReplyDeleteI think that you did very well with this piece by saying that even though all of these bad things are happening in the world the dairy industry can gain from this pandemic because of the high demand right now and with the high demand buying dairy products can further benefit farmers all over the US and especially in Wisconsin. I do agree that we should keep on supporting the small farms and I believe that the price of these dairy products should be risen in general because they were way to low to even make sense for dairy farmers to keep going because of the small profit margins. I think that the government should help out the farmers more and also raise the price of dairy because farmers usually don't make enough money to be able to retire ever so by giving them more money this will better help our economy and I think that most people wouldn't complain about spending a little more for diary if it was going to the farmers.
ReplyDeleteI agree that it makes sense to higher dairy prices because of the corona outbreak. The dairy industry really took a hard hit with restaurants and other places being shut down and higher prices would help keep them afloat. However, don’t you think that if they higher their prices on necessary items like milk, it will slow down their demand even more? Because of the higher prices, people might start resorting to substitutes like almond or soy milk for a cheaper price. This can be detrimental in the long run to dairy businesses because of the lake of consumers.
ReplyDeleteI always knew that the dairy industry was important to Wisconsin’s economy, but I never realized the scale that dairy farmers around the nation have on the economy. I liked how you brought the issue of the imbalance of growing operation costs and the price of dairy products to light by using multiple graphs to prove your point. In particular, the first graph really highlights that dairy farmers have been struggling with low profits for years -- without even considering the effects of COVID on income. I think that more than ever dairy farmers should be supported during this time, since small dairy farms that are the backbone of the dairy industry and it can be inferred that they struggled the most over the government shutdown -- especially when nearly 3 million jobs depend on it.
ReplyDeleteAfter reading the article about raising dairy prices, I agree with them that this would be beneficial because just like milk, farmers produce a lot of the daily supplements we need. For example farmers produce milk, eggs, fruits, vegetables, some even produce proteins. If we look at our My Plate diagram we see that this consists of fruits, vegetables, dairy, protein, and carbs. By not having these farmers producing food we are taking away up to a half of our place. I think it is also very important that she relates her topic back to the amount of jobs that dairy farms create. She states “According to an article by National Farmers Union, “The industry also creates nearly 3 million U.S. jobs that generate around $159 billion in wages.” This highlights the amount of people affected by this loss if farmers are unable to work and produce. She also connects these 3 million jobs in the US to an important fact that this will help reduce the Americans that experienced a job loss in 2020. Overall, I agree with her statement because she was able to connect it back to jobs gained, factual information regarding the money aspect of it, and the importance of keeping it.
ReplyDeleteI agree that an increase in Dairy prices would be a good thing and would help Wisconsin's economy tremendously. I also think that an increase in dairy prices may make it harder for low income families to afford food for themselves and their families. If there was to be an increase in dairy prices i feel as if their should be some sort of subsidies for schools who provide lunches to families. In many cities and communities around the world families and children rely on the schools for food. If there is an increase in dairy prices the schools should have some sort of subsidies to allow them to pay the same for dairy products so they can still provide food to students who need it while still putting money towards education.
ReplyDeleteI thought that you did a really nice job of explaining the economic effects of fluctuating dairy prices. I agree that new technology would definitely make it more difficult for small farmers to keep up with high-producing, larger dairy farmers, however how will the closing of small farms affect us? Besides from fluctuating prices, the loss of jobs would affect more people in rural areas and not in suburban communities. What examples of dairy farming supporting the economy would affect us in less rural areas?
ReplyDeleteThe thought about how the pandemic would do to the dairy farmers never really crossed my mind, I agree with what you have presented, and reading your findings helps show that. As you said, net income for those dairy farmers most years between 05-18 was below zero. Dairy farmers already get paid next to nothing, while working a really hard job, which is why many dairy farms started shutting down even before the pandemic got really bad. Now, with the demand of dairy products going down, many small dairy farms will be forced to shut down, as they will have no options.
ReplyDeleteOur farmers have had a lot of trouble with making enough money to sustain their farms and equipment for years, and with the pandemic, I can't imagine what they are going through. I think by making the price of dairy higher we will upset a lot of people, because naturally people want low prices, however, I think it is extremely necessary especially in a time like this. Milk normally costs $1.87 at the lowest and more often $3, so increasing this price by a dollar or two, shouldn't hurt anyone. Farmers do a lot for us and we definitely need to help them out and if giving them an extra dollar does that, I think most people will be okay with that.
ReplyDeleteThis is very interesting to understand the struggles that opposed dairy farmers in America due to the CoronaVirus. Living in Wisconsin, one of the top dairy producing states in America, it is cool to understand what kind of trade offs farmers had to make in order to keep their “business”, or farm, open during these circumstances. It also is interesting that they thought to raise their prices before Corona. Yes, this makes sense due to the farmers needing more financial help, but wouldn’t there be a surplus of milk and farmers would need to sell it for less to make some sort of return? I had noticed that this had happened to the gas prices during the beginning of Corona. Many gas stations were dropping prices drastically, mainly due to many people not driving as frequently. I could understand that while many people may not be taking their thirty minute commute to work, or school every morning, but they were in need of buying groceries. I also wonder how dairy farmers were affected by the Virus in terms of health concern. As I understand many meat industries were almost put out of business due to sanitary reasons, and it would be interesting to see how that translated to the dairy industry during this time.
ReplyDelete
ReplyDeleteI never really thought about how big of an impact the dairy has on not only Wisconsin but the whole United States. Living in Wisconsin we have a unique perspective on the importance of dairy on our local economy, especially during this unprecedented time of COVID. I find it very interesting that the dairy industry creates 3 million jobs and generates around $159 billion in wages. This makes me wonder if dairy prices were to be raised, how many more jobs would be available? Another question I had while reading this blog is if the prices were raised, would small dairy farms benefit equally as the large dairy companies would? This blog also made me curious about how much the price of the dairy products would need to be raised in order to make a difference. With a new “normal” forming, does this mean that the dairy industry will be needed more? With schools, restaurants, etc. now being open, dairy should be in a much higher demand. Now would be a good time to increase the prices of dairy products because it is in a high demand. Overall, I agree that diary prices should be increased because as long as it is in high demand, the economy will benefit from it.
I find it interesting that this situation has a positive outcome for both the producer and consumer. One might think at first that a rise in price will only be good the the producer, but even before COVID-19, the industry was struggling with jobs. After a rise in price, this will keep the industry afloat.
ReplyDeletePersonally, I had no idea that the dairy industry has had such a powerful impact not only on the farmers in Wisconsin, but on the U.S. economy. Although I agree that raising prices on dairy will help out local farmers in Wisconsin and would help our economy positively grow, I wonder if increasing the prices of dairy products will have any other positive or negative affects on farmers. According to Milwaukee Journal Sentinal, "“Farmers are doing a lot better. Milk prices today are at the highest level going back to 2014,” said Dan Basse, president of AgResource, an agricultural markets research firm based in Chicago. “It’s a combination of things. I call it a ‘sugar high,’ ” Basse said. “Unfortunately, we believe the dairy markets will be oversupplied" toward the end of the year when government food purchases wind down." With an effective increase on dairy pricing, the downfall is that when food purchases eventually wind down, the dairy industry is forced to dump any extra product that they are not able to sell. Because of this, is increasing the prices of dairy worth the product they loose when food purchases begin to fall?
ReplyDelete