Milk Turnaround Promises a Bright Spot in Your Budget

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After setting record high prices last year, the cost of milk is expected to take a dramatic drop this year.

If you’re a milk lover, rejoice. After seeing milk prices balloon to record highs in 2014, you’ll soon be able to drink in some savings in the dairy aisle. Thanks to the current milk glut, prices are expected to plummet.

Just last year, dairy farmers were overwhelmed trying to meet the global milk demand. How times have changed. Overproduction of milk and a drop in exports has sent some farmers reeling, The Associated Press reports.

[M]any farmers bought new equipment and expanded their herds to meet demand. But when China pulled back on its dairy imports after stockpiling milk powder and Russia imposed sanctions against the U.S. by halting trade, dairy farmers nationwide were left with a surplus, [Mark] Stephenson [director of dairy policy analysis at the University of Wisconsin] said.

You should see those global trends reflected in lower prices soon, if you haven’t already.

“With milk prices set to decline on the farm starting in January because of increased supply both in the U.S. and around the world, consumers should benefit at retail store shelves during the first quarter of the new year,” Bruce Krupke, executive vice president of the Northeast Dairy Foods Association, told the Times Union.

Lower milk prices have a lot of consumers smiling. “I guess I’m sorry if I’m hurting the farmer or the middleman, but I’m certainly delighted to pay under $3 a gallon,” Michael Kleinhenz, of Madison, Wisconsin, told the AP.

Dairy farming, like any agricultural-based business, is volatile, with its boom-and-bust cycles. Most farmers understand this and plan accordingly. The U.S. Department of Agriculture said half of American dairy farmers signed up for the Federal Margin Protection Program by its December deadline. The AP explains how the program works:

The U.S. Department of Agriculture program, a product of the 2014 Farm Bill, serves as a sort of insurance policy for farmers. The program sets average national feed prices, and farmers subtract that price from their milk price to determine their margin; if the margin is below a pre-determined amount, farmers get money from the USDA.

Milk reached a staggering $3.86 a gallon in 2014. So far, it’s dropped to $3.82, the International Business Times reports. And the price is expected to decline sharply as the year progresses.

We go through a lot of milk in my house, and I’ve already noticed small drops in price at our local grocery store. Of course, the organic milk that I buy for my kids is still selling at $4.54 for a half gallon. Sigh.

Are you a milk drinker? Maybe you could celebrate your milk savings with a chocolate milkshake. Share your thoughts below or on our Facebook page.

Stacy Johnson

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