It’s so expensive to produce milk right now — due to low demand and high feed costs — that farmers are being paid to slaughter dairy cows in order to “shift the pain to consumers,” says Bloomberg.

The National Milk Producers Federation in Arlington, Virginia, will pay dairies to slaughter 103,000 U.S. cows in coming months, says the article, causing milk futures to skyrocket. The U.S. Department of Agriculture is forecasting butter, cheese, and milk prices will be painful in 2010. Consumers can expect milk prices to double.

Retail butter prices may rise above the record of $3.937 a pound and cheddar cheese may top $5.097 a pound, according to Jerry Dryer, 65, the editor of the industry newsletter Dairy & Food Market Analyst in Delray Beach, Florida.

Experts say that farmers are culling the cows because exports have dropped 26% in the first quarter of 2009, while feed remained expensive.

“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.”

Bloomberg says it can cost as much as $17 to produce $10 worth of milk.

Dairy-Cow Kill to Double Milk Price on Biggest Slump Since 1980 [Bloomberg]
(Photo:nailmaker)

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