Wholesale milk price tops $20

By Guy Page

Good news for dairy farmers, bad news for consumers – the wholesale cost of milk will surpass $20/hundredweight (cwt) during 2022, the U.S. Dept. of Agriculture projects.

The projected combined cost for all classes of milk in 2022 is $20.75, according to a Dec. 15, 2021 USDA projection. That’s an increase over $18.24 in 2020 and $18.60 in 2021.

Prices are rising because production has fallen, the USDA said. The number of U.S. milk cows has continued to decline each month since June 2021. 

Year-over-year growth in milk supply was low in August and September and fell below the previous year in October. Based on recent data, U.S. milk production forecasts have been lowered for 2021 and 2022.

With lower anticipated milk supplies, price forecasts are higher for 2021 and 2022. The all-milk price for the fourth quarter of 2021 is projected to average $20.45 per hundredweight (cwt), an increase of $0.45 from November’s forecast. For the year, the all-milk price forecast is $18.60 per cwt, an increase of $0.10 from the previous projection. 

The cost of production of milk, however, is higher in Vermont ($16.87) than the national average $13.22 (2020 statistics). Only Maine and Illinois had higher milk production costs in 2020.

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4 replies »

  1. May be a dumb question but does this increase actually mean the farmers will get more money? If so that is good. Can anyone explain this in real meaning language for the uninformed like me?

    • Bob, I invite the dairy professionals among us to weigh in, but I think the short answer here is “yes”. Despite VT having a high production cost (and what a shocker THAT is), the prevailing high wholesale price means good times for dairy farmers. For now. I think. Other perspectives welcome.

  2. The Vt. “cost of production” in the article of $16.87 is actually closer to $21.00-$24.00, for those who know. Farmers have been living off their equity for years, and with many young “farm” people choosing not to enter the profession, their “equity” value for anything but subdivisions is disappearing quickly.

  3. Guy Page: Farmers are looking at huge increases in the cost of inputs this past year with more to come in 2022 in fertilizer, grain, and diesel. Those input costs will quickly wipe out any perceived “good times” for farmers.

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