Threat looms on milk prices

The Cayman Islands has briefly dodged a bullet, but the reprieve may be short and the ultimate consequences dire for consumers, who later this year could see milk prices rise by as much as $2 per gallon. 

Unless the United States Congress legislates a new Farm Bill, addressing support prices for thousands of American dairy farmers, the stop-gap extension of current regulations will run out toward the end of 2013, forcing a spike 
in dairy prices. 

The spike will affect not just milk, but all milk-related products, including cheese, sour cream, butter, yogurt and ice cream. Local supermarkets, conceding that consumers would not tolerate such increases, may be forced to diversify their suppliers, looking regionally for dairy producers, but facing problems of shipping, expiration 
dates and labelling. 

Chris Galen, senior vice president of marketing for the National Milk Producers Federation outside Washington, DC, told the Caymanian Compass that while price rises for milk were “hard to extrapolate because they are [determined] at the farm level” and subject to a welter of variables, “it would be at least a couple of dollars per gallon”. 

Woody Foster, managing director of Foster’s Food Fair in Grand Cayman, said the public would not accept such steep increases. 

“No, we could not sell it for another $2. People wouldn’t stand for it,” he said. “The only thing we could really do is diversify our suppliers, but you have to be careful because we already have a dating problem. We only have about 12 days to deal with it as it is, and now we’d have even fewer days, so [the supplier] can’t be too far away. You have to keep it fresh.”  

Air freight is too expensive for the bulky commodity, meaning alternate sources for dairy products need to be in the immediate region. 

“Jamaica does UHT milk, but I don’t know about fresh,” Mr. Foster said. “Cuba, I would hesitate because I don’t know their situation. We may try Panama, but we have to think about labelling, whether it would come in Spanish or bilingual. 

“Over the next few months, we will start to look at this if it isn’t resolved,” Mr. Foster said. 

Adrian Estwick, director of the Cayman Islands Department of Agriculture, indicated the prospects for replacing milk supplies from overseas with local product were slim. While Cayman had as many as three dairy cattle owners, he said, none produced milk, and the cost of replacing local cattle, numbering between 130 head and 150 head, was prohibitive. 

“In my opinion,” he said, “it’s not practical. Whoever is interested should work the numbers and be guided accordingly. One cannot simply ‘convert’ if you do not possess adequate dairy breeds, equipment, training, land. 

“Acquiring the cattle could take approximately nine months; acquiring and installing the equipment, approximately one year; and the training varies,” Mr. Estwick said. 

Mr. Foster suggested such conversions would also involve government regulation and food safety, buildings, fresh facilities and even pasteurising machinery. 

While India, the US and China are the world’s top milk producers, the only notable regional dairy industries are No. 7-ranked Brazil and No. 16-ranked Mexico. 

Mr. Galen explained that last-minute “fiscal-cliff “ talks in Washington had produced a stop-gap Farm Bill, essentially renewing expiring previous legislation, some parts until September and others until December. None of the sections, however, addressed what Mr. Galen said the industry needed to be sustainable. 

“If they hadn’t extended that, we would have reverted to 1949 laws, and the US Department of Agriculture would have been required to support a milk price to dairy farmers that is much higher than it is now,” forcing government, among other things, to nearly quadruple the price it pays for cheese. 

“What we want, but Congress did not pass, would eliminate price support levels of any kind”, instead creating an insurance programme that would make up the difference between milk prices and farmers’ cost of production, most of which is spent in feed for cattle. 

“When the feed price rises, the insurance programme would pay a premium,” he said. 

Meanwhile, Mr. Foster said he expected the quandary would ultimately be resolved, if only because, like consumers in the Cayman Islands, American consumers “won’t stand for it either”.  

No timetable for legislation has been set. 

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8 COMMENTS

  1. No, we could not sell it for another 2. People wouldn’t stand for it,

    The Cayman Islands really needs to come into the real world. In the UK, the equivalent of a US gallon of milk will cost over KYD4.

    Where you can’t produce any goods you have to pay the going market rate for them from elsewhere and for too long the islands has enjoyed a low price because of a subsidy the US taxpayer (now there’s a dirty word in Cayman!) pays to it’s milk producers.

    So, grow up and pay up.

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  2. It’s well known that agricultural products are controlled by the US government using supply and demand calculations irrespective of production costs. For years the public have been paying through the nose for food which has an artificially high market price – in fact farmers were being paid not to produce. The issue here is that America is so dependent on corn grain that the high demand for this product has led to high market price (this year they predict a drought which will potentially lead to lower corn production it’s a prediction!). This is the main food supply for dairy farmers – they are locked in. Ironically, farmers who feed their cattle a more natural/organic diet not reliant on corn will also be forced to raise their prices even though their production costs remain mostly unaffected. It’s a closed market where profit margins come first.

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  3. I am not sure why the Chief Agriculatural Officer thinks it is not viable to have dairy farming here. In the 1970s Grand Cayman had a dairy farm and fresh milk was delivered to households on a daily basis.

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  4. People the US just announced last week that milk would ANAOT go up in price for the next year if not 2 years….look it up. Furthermore, a country that does not produce is a consumer country…we CAN have milk cow here in Kman and we need to have them. it is much cheaper to feed the cow milk them and have fresh milk than it is to buy it from somewhere else ship it over and sell it at such high prices…..Wha di MAN do before machinery?? They went out there to the field grab the old cow teats stuck a bucket under ther and milked them. Very few people would be here today if not for the farmers and the cow. I say get ta growing vegetables for man, whey for cows and stop all this madness. It would be better to buy topsoil seeds and grow the necessary tings than to keep fooling around with all this manufactured food. Take a grocery store tomato and place it beside a homegrown east end tomato and see the difference….if you can see with your eye imagine what your taste buds will discover. My parents grow a garden EVERY year and we eat home canned otmatoe gren bean corn all winter long. Keep an eye out for my organic home canned foods….soon come to a raodside stand near you!! Grow your own veggies and grow your own cow.

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  5. Toy reference to UK prices was to show what the cost is where there is a viable local supply. In Cayman milk prices are subsidised by the US taxpayer which is ironic when you consider the fact Cayman resists direct taxation.

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