Higher milk prices are coming at a crucial time for the Northeast, according to Jim Putnam, senior vice president of First Pioneer Farm Credit, based in Enfield, CT. A 2006 dairy farm study confirmed that the key Northeast dairy states – New York, Pennsylvania and Vermont – lost eight farms (and 338 cows) per week during the past 10 years, he reports.
Based on the Farm Credit Dairy Farm Summary, only 46% of the region's farms were profitable in 2006. The region lost $85 million in dairy farm profits during the year. "Either higher milk prices or increased production efficiency is needed to improve profitability of farms in the region," he says.
The Northeast has two advantages over other regions regarding dairy pricing:
Much of the U.S. (milk and milk product consuming) population is on the East Coast. And, many of the region's producers grow their own feed.
Rising feed costs could give Northeast dairy producers a $0.30 to $1.50 per hundredweight advantage over western dairy producers," suggests Terry Barr, chief economist and vice president of agriculture and trade policy for the National Council of Farmer Cooperatives. He also warns that the United States is heading into uncharted waters in regards to higher feed costs.
If the ethanol-fueled market demand for feed grains and soybeans continues, forage quality and quantity will become even more important. And forage production – pasture and processed – will add to the Northeast's advantage.