Demand For Ethanol Drives Up Milk Prices

Farmers Pay More To Feed Cows
April 5, 2007

MADISON, Wis. -- Increased ethanol production is driving up the price of milk in Wisconsin.The state agriculture department said milk prices are averaging $16.40 per hundred pounds, up 80 cents from February and $3.50 from this time last year.Dairy economists said the higher demand for ethanol has spiked corn prices up to nearly $4 a bushel. The higher corn prices mean that dairy farmers are paying more to feed their herds. That's caused some to reduce their herds, driving up milk prices.Feed can be as much as half the production cost of milk according to experts. And even though farmers like family dairy farmers are like Tom Wagner of Wagner Diary are getting higher prices for their milk, other rising production costs are wiping out any gain."Surely we're not getting that dollar on every gallon that it just went up. We're probably lucky if we get a dime," Wagner said. "It's going to raise our prices, which in the end is going to raise the prices in the store."Experts said the price of milk is rising steadily and will climb as much as 9 percent higher by this fall.The Farm Bureau Federation said that other food products sensitive to increased corn prices like eggs and poultry are getting more expensive. The Farm Bureau said that milk was up 4 cents and eggs were up 6 cents this quarter compared to last quarter.Wisconsin ranks second in the country for milk production, behind California.

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