Tuesday, December 29, 2009

Who gets the money?

More questions that people ask us:
How bad a crisis is this really? It is estimated that since January of 2009, we dairy farmers were losing an estimated $100 per cow per month. Our calculations verify this. How long would you/could you run a business this way?
Let's take the gallon of milk I buy in the store, how much are you, the average farmer receiving for that gallon of milk? Let's take 2008, when there was a shortage of milk in this country. You paid $4 for a gallon of milk in the store. We, the dairy farmer got $2. The $2 we received was hardly covering our costs, because fuel and fertilizer costs went so high.
Who got the other $2 of the product you produced? The processor and the retailer got the other $2.
Then let's take the recent price that I pay in 2009 of $3 a gallon in the store, how much do you, the dairy farmer, receive? All this past year we have received about $1 of the gallon sold to you in the store.
If you only get $1 of the $3 that I am paying for a gallon of milk, who gets the other $2? The processor and the retailer get the $2, the same as the year before.
And how much does it cost you to produce that gallon of milk? It cost us, the dairy farmer, about $1.50 in 2009 to produce a gallon of milk.
Wait a minute, you mean the processor and the retailer are still getting the $2 for that gallon of milk both in 2008 and 2009, while you the dairy farmer, are receiving a $1 less this last year? That's correct. Notice, I did not say that it is 'right'.

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