PULLMAN, Wash. — Pacific Northwest dairy producers are enjoying record high prices as they enter 1999. Although prices are expected to drop in the second half of the year, economists expect the average price producers receive for milk in 1999 will remain above the five-year average.
That is the assessment of Roger Cady, Washington State University extension dairy specialist, Puyallup. It is contained in the 1999 Pacific Northwest Agricultural Situation and Outlook Report, released Wednesday (Dec. 30) by Washington State University, University of Idaho and Oregon State University economists.
Cady said on-farm milk prices probably will be higher in the first half of 1999 than for the same period in 1998, but lower in the second half.
He said the average annual milk price for 1999 probably will be between $12.70 and $13.25 per hundredweight. The average in 1997 was $12.07. The 1998 average is expected to be $14. Cady reported the cost of production averages $11 to $12 per hundredweight. A hundredweight is 100 pounds, which is about 11.6 gallons of milk.
Producers may respond to favorable prices by increasing production up to 2 percent nationally, Cady said. But any tendency for dairy producers to increase production so much they cause prices to fall will be checked by the scarcity of replacement heifers and the high price they presently are bringing.
La Nina is a major question mark for the dairy industry. If La Nina brings a harsh winter to the Northwest with flooding, wet weather and delayed crop planting, Cady said milk production could be lowered.
Washington dairies also will be affected by new manure management legislation, which will influence some producers to reduce the size of their herds and influence some producers to leave the dairy business.
Cady said high prices at the close of 1998 were due to depressed milk production during the first eight months of the year and to increased consumer demand. Milk production was depressed when poor weather, especially in California, contributed to high feed costs and difficult cattle management problems.
Nationally, milk production increased less than 1 percent during the first 10 months of 1998. A 2 percent increase for the year had been expected. Availability of fluid milk also was restricted by strong sales to cheese and butter makers. U.S. cheese inventories were down 4.4 percent from 1997, butter stocks were down 19.8 percent.
Overall dairy farm profitability received a rare boost from the collapse of the Asian export market for grain and forage products. Foreign buyers reduced purchases of corn, soybeans, alfalfa and other feed crops that dairy producers compete for. This resulted in significant drops in their costs.
Cady noted several changes in Washington’s dairy industry. In 1998, Idaho surpassed Washington in both cow numbers and total production. He expects Idaho to rank seventh in the nation for total milk production in 1998. Washington’s dairy herd has been shrinking. Cady expects declining cow numbers to level off.
Yakima County has surpassed Whatcom County as Washington’s leading county for dairy production and cow numbers. “This is significant because it is indicative of the migration of western Washington dairy operations to the east,” Cady reported.
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