There's too much product out there right now. Kelly says he thinks it's price fixing, that cheese processors are driving down the price of class-three milk, so they pay less for milk, and get bigger profits on cheese. Dave Hahn, director of dairy policy at Land o' Lakes in Arden Hills, doesn't like the accusations of price fixing against his industry. Land o' Lakes has contracts with 5,700 dairy farmers across the country. Hahn says processors feel for farmers suffering under low prices, but he says that's the way the market is moving.
Low prices force farmers to expand their operations.
Large farms can handle lower prices better than small operations. Minnesota farmers are competing for market share with big dairy operations in the new dairy states of California, Arizona and Idaho. Hahn says from a processors point of view, Minnesota farmers are going to have to start competing with the west for milk production. Jim Salfer, a Stearns County extension agent in St. Cloud, says the days of a farm family relying on a stable monthly milk check to keep afloat a diversified operation are gone. You have too specialize to survive.