Americans eat more cheese on Super Bowl Sunday than on any other day of the year, but dairy farmers won't feel like celebrating this year.

The prices they receive for their milk — used to make all that cheese — are already plummeting, something that typically doesn't happen until a few months after the Super Bowl.

And while that is good news for consumers, who are seeing the price of milk drop at grocery stores, it's bad news for dairymen.

The Pennsylvania Milk Marketing Board says the average minimum retail price of a gallon of whole milk will drop from $3.61 this month to $3.10 in February throughout south-central Pennsylvania.

The retail cost of other dairy products generally declines after milk prices fall.

That price decrease means dairy farmers, who dominate the Garden Spot's agricultural industry, are being squeezed tighter and tighter.

Small and large operations face big losses this year as the cost to produce milk is higher than what they are getting paid for it.

"There will be farms going out of business completely," Alfred Wanner, president of the Lancaster County Farm Bureau, said today. "Several Amish farms in the eastern part of the county are selling their cows. A large herd in the southern end is selling 1,400 cows this week."

A Narvon dairy farmer with about 600 cows, Wanner said it costs about $1.50 a gallon for many farmers to produce milk and they are receiving about $1.10 a gallon for it.

He blames the situation on high costs for feed, fuel and other items farmers buy. Another factor is what Wanner calls a bloated U.S. dairy herd that he said needs to be trimmed by 300,000 to 400,000 cows to decrease milk supplies.

Last year, dairy farmers received relatively high prices for their milk, which largely made up for the higher production costs.

But then the global dairy market experienced a perfect storm.

Economists say dairies in Australia and New Zealand recovered from droughts to push more milk products onto world markets.

The melamine scandal in the Chinese dairy industry drove a broad decline in dairy sales in much of east ern Asia. The bad global economy and the stronger dollar worsened matters.

Dairy farmers are somewhat protected by a federal subsidy. The Milk Income Loss Contract pays farmers whenever milk prices fall below $16.94 per 100 pounds, making up slightly less than half of the difference between the beverage-class milk price and that target price.

But Wanner said the current drastic milk price decline will still have a big impact on farmers, even as prices are expected to rise some during the second half of this year.

Overall, the National Agricultural Statistics Service expects farmers will sell their milk for 25 to 30 percent less money than they did in 2008.

Wanner has seen many milk price swings throughout his decades in the business, but never the high peaks and low valleys of recent years.

"My father used to talk about a 10-year cycle with milk prices, but now it's an 18-month to two-year cycle," he said.

To remain viable longterm, dairy farmers must somehow figure out how to lower their cost of producing milk to about $1 a gallon, he said.

Wanner and his wife, Carolynne, run their farm in a partnership with their sons, John and Matt.

Wanner said the family will be selling some of its less productive cows to try to become more efficient.

"We are not going to roll over and play dead," he said. "We're going to work hard to keep going."

MILK MONEY
Average retail minimum per gallon.

• February 2008: $3.85.
• November 2008: $3.77.
• December 2008: $3.58.
• January 2009: $3.61.
• February 2009: $3.10 (projected).


Staff writer Ryan Robinson can be reached at rrobinson@LNPnews.com or 481-6032.