Dear valued Kleinpeter Customer:
Many of you have asked about what determines the price of milk, and I wanted to let you know some of the factors that influence that price.
The U.S. Government regulates milk prices.
Most people are surprised to hear that the Federal Government sets the price that us Milk Processors pay for Raw Milk. This price is set each month, and varies up or down depending on many worldwide factors. These factors include: the availability and price of cows, the price of feed grain, the price of diesel fuel, the price and availability of corn, current forecasted crop yields, fertilizer prices, transportation costs, just to name a few.
Prices fluctuate, usually higher in the summer and lower in the winter.
Once all of these factors are input into a formula, a new Raw Milk price for the following month is determined. It is sent to us around the 23rd of each month, and either increases or decreases on the 1st of the following month. The price we pay for Raw Milk, which is milk right out of the cow still in the bulk tank at each farm, usually increases in the summer time, and decreases in the winter time. Why? Because the cows give more milk in the winter, and less in the summer. You see, a cow gives less milk when she consumes less food, and she doesn’t really want to eat much in the summer due to the heat. In the winter, the exact opposite happens. Cows eat more in the winter, and give more milk. The more milk available, the lower the price. These are the usual results of supply and demand. The more availability, the lower the price.
We are currently experiencing the highest prices for Raw Milk that we have ever seen. One factor is: corn seed prices are very high due to much of it being bought up for ethanol production, not cow feed production. Another reason is that fuel prices are so high. It takes a lot of fuel to power our tractors to plant and harvest crops. At the Kleinpeter Dairy Farm alone, we have 8 tractors to do our everyday chores. It takes that many to grow all the crops that we grow to feed our cows! Yet another factor is that many dairy farmers are going out of business. It is simply too hard and challenging to go to work every 12 hours, 365 days a year, and not have a steady source of income to depend on. The income isn’t steady, because the dairy farmers don’t know how much they will be paid for their milk until the price is announced. And they don’t know whether it will be higher or lower, it is out of their hands. It is a very challenging business for many farmers.
Kleinpeter maximizes efficiency to keep prices as low as possible without sacrificing quality.
These are just some of the factors that are affecting the price that we pay for Raw Milk. I hope I’ve helped you understand some of the reasons that milk prices are higher than we’re used to. We want you to know that the Kleinpeter Family appreciates you buying our dairy products, and we will continue to bring you the best value for your hard earned dollar. We are constantly looking to make our operation more efficient and more environmentally friendly. That quest never ends, and you have our word on this.
Thank you for choosing Kleinpeter.
Kleinpeter Farms Dairy, L.L.C.