Holstein World: Are there specific areas not directly related to dairy production that will have a “trickle-down” effect on milk prices? For example, increased ethanol production and the climbing price of corn?

Lee Mielke: Sections of the farm bill like EQUIP, CSP and energy offer opportunities for dairy farmers to offset costs associated with meeting environmental requirements as well as provide income to offset increased feed costs due to ethanol production.

Consumer perceptions will also impact producer bottom lines. rbST free milk, organic milk, milk from cloned animals, animal rights, drugs used on animals are a few of the issues that challenge the dairy industry.

Dave Natzke: With ethanol, you””ve highlighted one of the major issues. We””re headed for record milk prices this year. Unfortunately, with high costs related to feed and energy, profit margins will be tight. Due to security issues and energy concerns, the U.S. seems to be developing a “cheap fuel” policy, by subsidizing domestic ethanol production to decrease our reliance on foreign oil. In doing so, we have created massive growth in ethanol infrastructure, creating additional competition for corn and soybeans. It”’’s estimated ethanol production used about 20% of the total U.S. corn crop last year, and that”’’s expected to continue to rise.

As stated above, meeting environmental regulations add costs to production, but don””t add to the milk price.

Any immigration policy that sharply restricts labor supply could have a negative impact on dairy producers.

This entry was posted on Friday, March 30th, 2007 at 8:13 am by sschmidt and is filed under Guest Blogger Series. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.