They are cutting supply to respond to weak demand. That makes sense. Have no fear, if demand picks back up, there will by dairy cows to fill it. The cows are not in short supply... and this does increase the supply of beef.

Oh noes! I'm making half a dozen kinds of icecream next month! Doh!

poor milky moo moos :(

This is the way the market is supposed to work.I have raised cattle (beef and dairy) and the fastest way to end up with a hundred thousand dollars worth of cows is to start with a million dollars worth.

Any farmer will tell you that it is the middleman that makes the folding money.

Well, that sucks.

Low demand?!

Clearly they don't know me. Milk is the most delicious drink on the face of this planet. It's so sweet and yummy. Many times have I gone through 3 gallons in a week because I can't help myself.

Which reminds me, I'm currently out of milk... dammit.

Also, Oh my god the preview button is back!!!!

Beef, it's whats for dinner.

Ugh. Time to look more seriously into milk substitutes. I hate soy milk, and almond milk is somewhat tolerable, but doesn't have the smoothness of the real thing. Next I guess I try rice milk.

Isn't this, like, market manipulation?

Hmm somehow raising prices dramatically doesn't make me want to buy something.

Hell, I drink a lot of milk, and if prices skyrocket, I will probably buy a lot less. That's just common sense.

I think beef for people comes primarily from steers. I have seen some ethnic restaurants specifically advertise "cow beef," though.

I think it's time to make a Costco run and stock up on butter. As for the milk increase...I've got kids and will just have to pay.

I RTFA...and it blamed the price of feed for the imbalance...most notably the price of corn ($4/bush!).

Corn belongs on your plate, not in your gas tank.

"No one is making money producing milk," Wells Fargo's Swanson said by telephone from Minneapolis. "The milk price remains well below the total cost of production."

That is impossible. Unless you have someone making it cheaper in large quantities, the price can't drop below the cost. The only way that could happen is if farmers are purposely selling the milk for less than it costs. The solution is simple. Charge more.

@Tzepish:

This would never fly in many other industries. Staple foods should have more regulation. Imagine:

The American Medical Association will pay hospitals to demolish 103,000 U.S. hospital beds in coming months, says the article, causing health care costs to skyrocket. The U.S. Surgeon General is forecasting organ transplant, mastectomy, and tumor removal prices will be painful in 2010. Consumers can expect emergency room prices to double.

I'm going to start hoarding milk now and store it in a 50 gallon steel drum in my garage. It will suck trying to pour it out of the drum into a used milk jug, but I'm willing to go through the pain.

Either that or I get my own cow and store her in the garage.

Well, let me tell you, if you want to make more money, you should definitely raise prices.

Why not put the cows in, say, a field of grass? Maybe that would lessen the need on the grain? I am not a dairy farmer, so I'm just grasping here.

Honestly, I've got four kids. If the price of a gallon of milk goes to $5-6/gal, we can find other things to drink, like water.

Let them eat steak!

@thereij: We drank powdered milk growing up. Do they still make that stuff?

@zentex: YES. With corn being so ubiquitous, I'm surprised we haven't seen a greater overall increase already.

@HiPwr: Same here. I still have all those barrels I was using to hoard gasoline last summer.

@fantomesq:

It is sad that this "cutting of supply" equates to animal sacrifice, taking the lives of a living, breathing creature.

@HiPwr:

I do believe they do. Wouldn't the price of powdered milk be affected by this as well?

That being said, what if this is just a ploy to get more people to drink powdered milk? What's next? Soylent Green?!

@rpm773: Be careful with that. If you get milk in your gas tank, it could really mess up your engine.

So, will Tuscan Whole Milk have some of it's miraculous features removed to keep the bottom line low or will the price go up from $70/gal?

@Corporate_guy: If no one is buying it, and you have tons of cows already set up, what are you going to do, stop feeding them?

While I adore dairy products in general, less cheese, butter, and frozen desserts will probably make me a healthier person. (Trying to find a silver lining here...)

Cows are built to eat grass, not "feed." If you let them eat grass, not only do you save money you would otherwise spend on feed, but you save money on the antibiotics that you would otherwise have to use to prevent them from getting sick from eating an improper diet. You'd also get more nutritious milk. Why is something as basic as this a foreign concept to most dairy farmers?

@ElizabethD:
I was thinking the same thing.

@Dooley: Living, breathing, DELICIOUS creatures.

@Wireless Joe: the government is one of the reasons this is happening. their subsidizing of the ethanol industry is pushing corn prices, which leads us to higher costs of milk production. just one more reason the government should think very carefully before artificially manipulating prices (as they are by subsidizing ethanol) because there will be unintended consequences.

I think a parody of the "Happy cows are from California" ad would be appropriate right now. They can't be too happy right now if they're about to get slaughtered.

@Dooley: If we didn't eat beef or drink milk, cattle would not exist. It certainly wouldn't survive in the wild.

@Dooley: Except we get to keep the delicious portions of meat to ourselves, not surrender them to Zeus. I suppose we could get some seers to mess around in the intrails though. That could be fun.

Cows are supposed to eat grass, not corn. If dairy farmers didn't try to run industrial milking parlors and gave their animals a nice pasture to graze in, and sold the milk locally as opposed to multinational corporations, they wouldn't be in this mess.

Go see Food, Inc!

@Saboth: true, but lower supply will increase prices. like the article said, it costs them $17 to make $10 of milk. either lower the cost of production, or raise the price. they can't lower cost of feed, but cutting supply will increase price

It's been this way for years. Not to this extent, but dairy subsidies exist for a reason.

@StutiCebriones: Dairy cows and eating cows are not generally the same cows anyway. When my uncle retired, he sold his dairy cows, and bought some angus to raise as a hobby, with intentions of slaughtering one for eating on occasion.

@thereij:

In Pennsylvania, we have state minimum pricing for milk. Not sure about other states, but if they want to make more money they'd have to raise the state minimum.

According to Dirty Jobs, a cow's diet is difficult and important to regulate. I don't think its sufficient to merely eat grass.

@SavitriPleiades: I'm sure grass-fed cows produce different tasting milk than their corn-fed sisters.

Item one in the economic suffering to be caused by the global warming hysteria. Feed prices are up because the corn is being turned into ethanol.

Wait until they get cap and trade passed. Then the real hurt will come.

At Kroger right now milk is $1.98 a Gallon.

@Corporate_guy: Milk is essentially a commodity. The producers do not get to set the price. Just like corn, orange juice ... The cows will keep producing milk. They could throw away the milk but they still had to pay to feed the cows. If you have 1000 gallons of milk that cost you $17,000 to produce do you not sell it if no one will offer you more than $10k? The only control farmers have is on their own output. If enough producers cut their output the price should rise.

Oil prices operate in the same way. OPEC tries to control pricing through supply. It works to an extent but lately the price has fluctuated due to so many other factors that they don't have as much control as in the past.

So, uhh, does this mean cheap beef in the near future?

@HiPwr: Man, this type of response is soooo tired.

@Snarkysnake: No, how markets are supposed to work is to remove the billions of dollars of market-distorting aid that flows out of our pockets and into the pockets of Big Agra.
What we have now is a manipulated market being further distorted by Big Agra gaming the system to drive consumer prices even higher.
Talk about biting the hand that feeds you...

@ingenieur: But it's a delicious response!

... Okay, that was just me being annoying.

I like half and half the most. That is a creamy drink. I can go through a half gallon a day if I wanted to....it's just so darn expensive for it.

@K-Bo: The only honorable way to do this, of course, is to arm each side with knives and strip both to loincloths. Then on the verdant meadow, two warriors enter, one warrior leaves!