Milk Cost of Production Estimates for April, May, and June 2016

Milk prices for Connecticut farmers continued to stay under $15/cwt during the second quarter of 2016. Meanwhile, the cost of production increased an average of $1.46/cwt, to an average total cost of $32.01/cwt for the quarter. The increase in costs is primarily due to increases in purchased feed costs. As a result of low prices and increasing costs, the average shortfall of prices minus the minimum sustainable cost per cwt was on average $11.49/cwt. Thus we continue to see a need for continuing payments to Connecticut dairy farmers under Public Act 09-229. Looking forward, the continued surplus supply has lead the northeast federal milk order to extend temporary dumping through the middle of the third quarter of 2016. While this should help milk prices recover some entering the second half of the year, forecasts continue to indicate depressed prices relative to the cost of production. Therefore, the continued gap between the statistical uniform price and the minimum sustainable cost of production results in financial stress to Connecticut dairy farmers absent Public Act 09-229.