Dairy prices are stable now, but experts say look out for the fall


CHARLESTON, S.C. (WCIV) -- As federal weather forecasters predict drought conditions will stay on through fall, farmers warn that no rain means no feed and that means higher prices in the grocery aisles.{}According to The National Oceanic and Atmospheric Administration's outlook for August through October, nearly every state in the nation will have higher than normal temperatures and for at least 15 states, little hopes of average rainfall.{}But what does that mean for your grocery bill? According to Agriculture Secretary Tom Vilsack, you may not see a difference now, but come Autumn, prices of meat and cheese could be going up.{}"The prices and the impact of a drought will probably not likely be seen in the grocery aisle until later next year in 2013," Vilsack said on CNN's "State of the Union."{}In fact, the USDA Dairy Outlook for 2012 says:"Reflecting the projected softening in dairy product prices, farm milk prices will likely be lower in 2012 than last year. The all-milk price is forecast by USDA to average $18.00 to $18.70 per cwt in 2012, compared to $20.14 per cwt for 2011." (Editor's note: a cwt is 100 pounds){}A look at the USDA's Dairy Forecast released July 16, reveals annual milk prices went down from $20.14/cwt in 2011 to $17.05/cwt this year. It projects the price for next year to go up 30 cents. {}"It [the drought] would impact and affect, obviously over the long haul, food prices, not as dramatically as some people would expect, because farmers only get 14 cents of every food dollar," Vilsack told CNN. "But it is still going to impact consumers as well."{}According to USA Today, milk prices are lower because of surpluses built up over a mild winter and spring. But experts paint a darker picture.{}Roger Hoskin, an agricultural economist with the Department of Agriculture's Economic Research Service told USA Today that shoppers could see higher milk prices and little changes in restaurants like less cheese on your pizza or salad bar.{}According to USA Today, the heat and drought conditions are already affecting milk output on dairy farms. They report that high temperatures means cows give less milk and high feed prices mean higher maintenance costs.{}The USDA's Dairy Forecast for 2012 predicted conditions like this back in February:"Given projected income forecasts, 2012 could be a challenging year for those U.S. dairy producers who rely on purchased feed and have high debt levels. Price formation in the U.S. dairy industry is becoming more dependent on events in global markets. The result is likely to be greater variability in prices for dairy products and milk."{}Vilsack told CNN that action needs to be taken now.{} {}"We've got thousands and thousands of farm families and ranch families across the country who are suffering today, in 29 states," he said. "This is not a Republican or Democratic issue. This is an American issue. We obviously need to help these folks. This is why we have a safety net. This is why we need passage of a food, farm and jobs bill quickly."{}He says Congress is considering a farm bill that would reinstate farmer disaster relief.

Kelly Smith, executive director of the South Carolina Dairy Association, says a drought would definitely have an effect on dairy products, but would ultimately affect all farm-produced goods.

"We already are struggling a little in the industry due to fuel costs. Now, with this drought, it's going to be a double-wammy," Smith said.

Smith says fuel costs affect all aspects of agriculture, because the cost to transport feed for livestock, materials for growing and finished products fluctuates and is uncertain.

A drought affects prices the same way. In a drought, less product is grown, which affects the cost of produce in the store and the cost of feed for livestock. Farm goods as a whole, Smith said, would see an increase in cost.

How much?

Smith says it depends on how bad the crops from this year are hit.

Click here to see milk prices around the Lowcountry.