Milk price average was $6.08 less in 2009

Hoard's Dairyman: 

Milk price average was $6.08 less in 2009

Date: 
Fri, 01/08/2010

Although it ended on a two-month upswing when prices were unbelievably high by comparison, the worst producer milk price year perhaps ever has mercifully ended.

Announced USDA Class III price for December is $14.98 per hundredweight, an increase of 90¢ from November. This is both the highest price of the year and perhaps the only month it will cover production costs for most dairy producers across the country.

Even with those two months over $14, Class III price average during 2009 was an abysmal $11.36, a decline of $6.08 from the previous year and the lowest average since $10.42 in 2002. But there’s a huge difference between then and now. Production costs in 2002 were roughly $1 above Class III prices, while in 2009 they were $6 to $8 higher for much of the year.

The possibility that 2009 was the worst price year ever becomes a legitimate possibility when Class III levels are adjusted backward for inflation. For instance, $11.36 in 2009 is equal to $5.76 in 1986 – but actual Class III price average that year was $11.30. Adjusted back to 1979 it is equal to $3.81 – but Class III average that year was $10.91.

2009 prices still look horrible even when you go all the way back to the depths of the Great Depression. Adjusted back to 1935, the 2009 Class III price average is equal to just 72¢ per hundredweight.