Milk Price War Pits California Dairy Farms Against Cheesemakers

Ray Souza’s voice cracks a bit when he says it, when he tells how his family’s Turlock, California, dairy farm is struggling to pay the bills.

“We go from black to red month by month,” the 66-year-old said. “For us, it’s break even at best.”

Souza is like many other dairy farmers in the state who say the price they’re paid for milk from cheese producers isn’t enough to cover the soaring cost of feeding cows. Those economics have caused a fifth of California’s dairies to shutter since 2007, according to state agricultural figures.

California is the largest milk-producing state in the U.S., accounting for 20 percent of the national supply. Cheesemakers buy about 43 percent of all the milk produced in California at prices set under the state’s unique pricing system rather than by federal formulas.

To read the rest of the story, please go to: Bloomberg Businessweek