Feb 25, 2009 6:43 pm US/Eastern
Md. Dairy Farmers See Milk Prices Plunging
TALBOT COUNTY, Md. (WJZ) ―
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Milk prices are plunging while the costs of running a farm are not.
CBS
A big shoe is dropping right now and it's falling on Maryland's dairy farmers.
Alex DeMetrick reports milk prices are plunging while the costs of running a farm are not.
"There's been a 40% drop in the cost of milk since November, which is very significant," said Buddy Hance, Assistant Secretary of Agriculture.
Dairy farming is the third largest agriculture business in Maryland but the number is declining. It was 825 in 2000 to 528 now. But more could follow. Milk prices are expected to hit lows not seen in decades.
"They're projecting about a dollar a gallon. To sustain a dairy farm, you need $1.70 a gallon, just to break even," said dairy farmer Eric Foster.
Just last summer, dairy farms were making money. With Australia in drought and China's market booming, demand soared.
"Australia's back up and China's backing away," Foster said. "At the same time, the recession hit."
Farmers live with price fluctuations all the time, but not like this.
"We're used to riding the milk market but with this one coming on so fast, it hit us hard," said Holly Foster.
At their farm in Talbot County, they might need to sell off cows or diversify beyond their current cheese and poultry operation.
"You're kind of shooting yourself in the foot but at least you have one foot to walk on," Eric Foster said.
While farmers were seeing more money for their milk last summer, those profits were cut into by high fuel and feed costs.
(© MMX, CBS Broadcasting Inc. All Rights Reserved.)
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