Saturday, January 03, 2009

Dairy Prices

The New York Times reports a huge surplus of milk production that is causing dairy prices to fall rapidly.

But now, demand for dairy products is stalling amid a global economic slowdown and credit crisis, even as supplies have increased. The result is a glut of milk — and its assorted byproducts, like milk powder, butter and whey proteins — that has led to a precipitous drop in prices.
The Agriculture Department has committed to buying 111.6 million pounds (50,000 tonnes) of milk powder at 80 cents a pound, for roughly $91 million.

This is bad news for our economy. Dairy production is to the New Zealand economy what the auto industry is to the United States. New Zealand used to be a country with 3 million people and 60 million sheep, but that has changed over the last few decades, as many farmers have converted from sheep to dairying. Dairy products now account for nearly a quarter of exports.

The collapse in the price of milk powder will have a serious impact on our economy.

1 comment:

Anonymous said...

The way I see it.
Our world has become more like integrated chain of production lines.
Bananas from Columbia, grapes from Chile, jeens from China, cheese from Finland, lousy GM cars, subprime mortgages and financial pyramids from US, and so on. This is ok at some point as long as we all into finances and we know when to get out.

The bad part is we are not in finance by majority and as usual we have no clue when shit is going to hit the fan.