As Recession Deepens, So Does Milk Surplus

It turns out that shutting down the milk supply is not as easy as closing an automobile assembly line. To date, the taxpayers of the United States have spent about $91 million to buy up and store sacks of milk powder. The bags of milk powder represent a startling reversal of fortune for the dairy industry, which flourished in recent years thanks in part to a growing appetite for milk, cheese, ice cream and pizza in places like Mexico, Egypt and Indonesia. Many of those countries, of course, were benefiting from a global economic boom led by free-spending consumers in the United States. As American dairy farmers increased their shipments of powdered milk, cheese and other dairy ingredients to foreign markets, their incomes rose. And the demand surge helped drive up the price of milk for American families. The national average for whole milk peaked at $3.89 a gallon in July. 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 and surplus that nobody will buy, at least not at a price the dairy industry regards as acceptable. More here.