Wednesday, July 18, 2007

High Milk Prices, Part 2

dairy cow food vs fuel americaYou may recall a recent article we did on the subject of higher milk prices which showed how they were caused by several key non-corn factors like increased foreign demand and energy costs.

Major media reporters did not take the time to accurately report the issue correctly. In their rush to get a sensational headline, they got it wrong. In our first example, only the Sacramento Bee had done its homework.

The unintended consequence of this poor reporting is an erosion in the public's confidence that America can produce a safe and reliable food crop. And a potential loss by our farm community that our nation values the risks and hard work farmers give every day to produce it. Our nation's media have a responsibility to get the story right and stop this misrepresentation of corn and ethanol's impact upon higher food prices.

It's refreshing to discover that the St. Petersburg Times got the story right. The tide might be turning.

In their article this week, the reporting starts off with the familiar basic issue:
Ethanol wants corn and so do cows. So corn gets more expensive. And feeding corn to dairy cows gets more expensive. So your gallon of milk gets more expensive. Sounds logical. It's been on television, and in newspapers.

But it's just not true. Dairy experts, government economists, and market analysts agree.
The article then goes on to also correctly report:
"The media has tied the rising price of corn to the rising price of milk" "Yes, corn is being diverted for ethanol. Yes, that is driving up corn prices. And yes, that means your local dairyman is paying more to feed his cows. But that isn't driving the price at your dairy case,
So what is driving up the price?

Roger Hoskin, an agricultural economist with for the U.S. Department of Agriculture, offered this primary reason:
"Americans buy oil. A lot of oil, from places like the Middle East and Russia. They also buy clothes, toys and electronics from China, Thailand and Vietnam."

"The people we buy oil from - and iPods and poison pet food and everything else - are coming back and spending money in our country," Hoskin explained. "They come back and they want to buy the same stuff you buy and they outbid you for it."

"Their competition for those items drives up the cost."
The increase use of corn has been blamed for a host of food price increases. But the facts show otherwise.


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Source: St. Petersburg Times

Food and Fuel

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Unknown said...

You are exactly right. Many reporters did not do their homework. The article from The St. Petersburg Times is excellent. I'm a TV News Reporter myself and was interested in doing a story on the hike in price of milk. At first, I also thought it was due to the increase in price of corn feed. After a lot of research and talking to a wonderful Central Texas Dairy Farmer, I learned differently. It was a pleasure to visit the Dairy Farm, learn the truth and report the truth. Check out the story on Thank You!

Class One PC Services said...

Ok wait a minute here. Are you saying that the price of milk is rising because foriegn countries are out bidding us for our own milk? When does the term "Business is Business" get thrown out and honor, patriatism egt pushed back in? How far does something have to go before something is done???

Frustrated in America

Rodger Mansfield said...

According to various media and the latest report from Iowa State, International demand for milk is a cause of higher dairy prices:

The primary cause of high milk prices is that international demand for dairy products has outstripped international supply. The lack of supply is a result of drought in Australia, a drop in subsidized milk production in the European Union, and a lack of profits in the U.S. dairy industry in recent years. Strong world demand is a result of continued strong income growth in China, India, and other Asian countries, and continued strong U.S. demand for cheese. The excess world demand for dairy products has pulled U.S. products onto world markets, thereby raising U.S. prices. Instead of fighting foreign competition, U.S. milk producers are now benefiting from international markets.