As Recession Deepens, So Does Milk Surplus

The long economic boom, fueled by easy credit that allowed people to spend money they did not have, led to a huge oversupply of cars, houses and shopping malls, as recent months have made clear. Now, add one more item to the list: an oversupply of cows.

And it turns out that shutting down the milk supply is not as easy as closing an automobile assembly line.

As a breakneck expansion in the global dairy industry turns to bust, Roger Van Groningen must deal with the consequences. In a warehouse that his company runs here, 8 to 20 trucks pull up every day to unload milk powder. Bags of the stuff — surplus that nobody will buy, at least not at a price the dairy industry regards as acceptable — are unloaded and stacked into towering rows that nearly fill the warehouse.

Mr. Van Groningen’s company does not own the surplus milk powder, but merely stores it for the new owners: the taxpayers of the United States. To date, the government has agreed to buy about $91 million worth of milk powder.

“The thing is, they are going to produce it because they have to milk the cows,” Mr. Van Groningen said. “It’s like a river. It keeps coming.” In addition, dairy farmers are all too aware that, unlike industrial machinery, cows cannot be turned off and stored until economic conditions improve; they must be fed and cared for, at continuing expense.

The bags of milk powder represent a startling reversal of fortune for the dairy industry, which flourished in recent years in part because of a growing appetite for milk, cheese, ice cream and pizza in places like Mexico, Egypt and Indonesia. Many of those countries were benefiting from a global economic boom led by free-spending consumers in the United States.

As American dairy farmers increased their shipments of powdered milk, cheese and other dairy ingredients to foreign markets, their incomes rose. And the demand surge helped drive up the price of milk for American families. The national average for whole milk peaked at $3.89 a gallon in July, up from an average of $3.20 a gallon in 2006.

more at link.
http://www.nytimes.com/2009/01/02/business/02dairy.html?ref=economy

I cannot feel sorry for these guys. Everyone decided to over-expand, now they can't deal with a contraction? Milk is way to expensive anyway.

Government cheese and milk powder to the rescue. It was the only way I was able to eat during the Reagan recession.

I remember at least ONCE A YEAR a picture appearing in the Herald News (long gone, Paterson NJ based) a picture of some greasy looking white politician on the back of a truck passing out "Gubermint cheeze" to the underprivileged in Paterson or Newark. Like clockwork in the Spring, they would drive to the predominantly African-American towns and hand out cheese and powdered milk. In the Seventies, it became cheese, powered milk and condoms. Then it finally stopped simply because food stamps became available instead of that demeaning process. With the economy the way it is now, I can just imagine people being given sacks of powdered milk and boxes of cheese again as the unemployment lines are overwhelmed. $91 million in powdered milk isn't really a lot at 80 cents a pound. And the storage costs make it prohibitive too.

FArm subsidies, got to love 'em.

It's all coming back to us...

there is a surplus of food.

can take more.

There is enough for everybody, when will they get it?

The most likely recipient of aid is not the country family farmer of our collective imagination, it's this nightmare:

people starve, so that they can take more.

We have the resources and the means to ensure nobody has to die in ignorance from deprivation anywhere, we simply lack the will to do so.

There is a UN study referenced in John Perkin's book that shows for about 10% of our military budget (that's the reported budget, not the real budget which is almost twice that), we could remove the need for the military budget. We can provide food, shelter, education, clean water, and health care to the world (yes, ourselves included). Right now. For less than we spend in a couple of months slaughtering Iraqis.

Why don't we? Because that would mean some billionaires and corporations would stop making even more money. It would mean the price of necessities would reflect their true cost. Because we couldn't support a financial industry that produces nothing, but sucks about 30% of our product out of the system.

can't afford feed for their cows, that's why they sell them for hamburger. And if we fed every nation on earth with our military budget it would do more harm than good, we could not feed them forever and we would destroy local economies in 3rd world countries since they are almost all agriculture based.

The parasites are the people that own the dairy men (I'm sure there are a few women as well).

Basically I'm talking about those that run the banking/finance/insurance/military hardware industries, IOW, those that have all the money, and continue to take more.

The methods proposed in the study do not include, for example, shipping American dairy cows to 3rd world countries, rather providing the means for giving the people the means to sustain themselves in ways appropriate to their needs and resources.

The cost of this, including the supporting infrastructure, does not have to be borne by the US alone, but the fact that the cost amounts to only about 10% of what we do spend on our military every year remains.

The herds will be "done in", and of course the prices will go UP, because of the artificial shortage created..

Truthfully, people probably can do without a LOT of the dairy products we have today, but milk & milk-solids are in just about EVERY processed food item..

Too bad we don;t have a "rewind" button, to go back to before things got crazy:(

what's happening to choice cuts of beef. You can't raise an all-chuck cow, so what do they do with the prime rib that few can afford? I wonder if unsold meat isn't factored as part of operating costs and thereby "subsidized" by higher prices on cheaper cuts.

I buy very little meat these days.. we don;t miss it all that much:)

What I'm wondering though, is what happens when supply so far outstrips demand you can't sell it, but you can't stop producing it. Sort of as if a law of nature makes every 20th car out of General Motors a Hummer. I've never found out how the industry deals with the problem.

Kudos on your largely meatless diet. I expect a lot of us will be joining you soon :hi:

I've never seen milk on sale around here. Normally $3.69 and up.

which is the normal sale price around here.

Milk marketing was the very first aspect of agriculture to operate under the complete oversight of the Federal Government (USDA or whatever was in place at the time). If I'm not mistaken milk prices are now, and have been since about 1936, set by Government fiat.