Drought, Demand Driving Up Dairy Prices

Milk prices hit their highest prices since 2011, and recent price spikes might remain on grocery bills for a long time.

The severe drought is increasing costs for California dairy farmers and has some wondering whether farmers will decrease production as they consider selling cows instead of paying increased costs to feed them.

California milk production has gone up so far this year, but farmers’ profit margins are diminishing as the drought has forced farmers to buy cattle food, such as alfalfa, from out-of-state, said Western United Dairymen CEO Michael Marsh, whose non-profit represents 60 percent of milk production in California. The higher costs are a problem for farmers still recovering from the recession.

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