Milk production has exceeded year-earlier levels since last
fall, recovering from the 1 percent decline that occurred in
the 1995/96 dairy marketing year. The gains in milk production
widened considerably during the spring and summer
months as milk per cow recorded large increases
relative to the depressed levels of the year before. The
inventory of milk cows on farms still lags the year-ago
level, with the decline especially apparent among states
comprising the Seventh Federal Reserve District. Milk
prices, although trending upward this summer, fluctuated
widely over the past year. Nevertheless, the $13 per hundredweight
average price estimated for September was far short
of the all time record high of $16.50 recorded one year earlier.
The resulting squeeze on earnings and forthcoming changes
in the dairy support program are no doubt causing
many dairy farmers to exit the industry.