Milk prices could go up due to drought

ALLEN COUNTY, Ind. (WANE) - Grocery shoppers could see a 20 percent increase in milk later this year.  The price raise is due to Indiana's drought and the increase in costs for dairy farmers to feed their cows.

Gary Lee, the Vice President of Procurement at Prairie Farms Dairy, said Friday milk could go up 15 to 20 percent.  The full effects of the drought may be seen in the store as early as October of this year.

When milk prices will fall back down to their current price will depend on when the drought ends.

"If [dairy farmers] can get adequate supplies of feed, you could see production rebound and prices fall in the first or second quarter of 2013," Lee said.  "But if these effects last for a while, it could be some time well into the second half of 2013."

The increase is due to extra expenses for dairy farmers, and how they get feed for their cows.  The drought is making it difficult for farmers to get hay and feed locally.  Instead, farmers are having to go out of the area to get feed from places that are not under a drought.

"It's costly to do that," Andrew Kuehnert, of Kuehnert Dairy Farms, said.  Kuehnert works at his family farm.  He's also a dairy nutritionist.

"We'll go much longer distances to find the quality of hay that we're used to," Ed Bunsold, the owner of Hunter Hill Stable , said.

Kuehnert said yields are down this year for hay.  Many farmers made their first cut in May, and that number was below average.  In June, yields were down drastically.

"The second cutting was very awful," Kuehnert said.  "We got less than a ton per acre."

Dairy farmers use hay to feed their cows, who need high-quality food to produce high-quality milk.

"Without that forage, we're not going to produce as much milk, and in turn it will be more costly to the consumer," Kuehnert said.

At the Kuehnert farm, the 250 dairy cows are milked three times a day.  Kuehnert said the drought is costing the farm nearly one dollar each time one cow is milked.

It's an extra cost some farmers can't afford.

"It's really a tough situation for the dairy industry," Kuehnert said.  "Everybody in this area is in the same boat looking for feed."

Farmers then need the price of milk to go up to offset the additional costs to bring in feed. 

Bunsold said he's able to pass on the extra costs to his customers.

"In the past, when [cost[ has increased, we go ahead and add a supplementary fee to it, and that's what we'll do this year," Bunsold said.

Bunsold said he can house 30 horses at a time at his stable.  He expected his customers to be able to afford the additional fee.

Right now, a inch of rain would help improve the hay yields, but Kuehnert said that amount would not nearly be enough.