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— When it comes to gasoline, the public has a good grasp on price trends, thanks to the widely reported price of a barrelofcrude.However,tracking milkpricesisnotsoeasy,even if prices paid to producers for raw milk are at a 40-year low, said Dr. Wayne Kellogg, professor and educator for the University of Arkansas Division of Agriculture.

"Milk producers have been hurt by the world's economic problems - perhaps more than any other sector," he said. "For a while milk prices were high, but expenses for feed and fuel escalated at the same time.

The laws of supply and demand in the dairy industry are complex. For example, consumers use more cheese and butter inthe fall, according to the U. S. Department of Agriculture.

Even seemingly small factors like breakfast beverage preference come into play. Information released in 2007 by the NPD Group, a consumer research firm, found that 15.1 percent of consumers who eatbreakfastawayfromhome order carbonated beverages with breakfast, compared with 7.9 percent in 1990.

Fluid milk demands the highest price, while the price for milk used in other products - such as butter, cheese, ice cream and dried skim milk - varies.

USDA instituted the orders in the 1930s to promote orderly marketing conditions.

Some states, such as California, abide by their own regulations instead of the federal orders. Critics say the federal orders are outdate; supporters say it gives dairy farmersa level playing field.

"Ultimately, the price varies with the demand for products," Kellogg said. "If the demand is high and purchasers are bidding for milk in short supply, then prices paid to the milk producer will increase.

Attheconsumerlevel"retailershatetoreducethepricesin the store because it is difficult to maintain sales when the prices increase rapidly," Kelloggsaid."Itmaybeappropriate to encourage retailers to drop prices hoping that sales will be stimulated."

Due to low prices and other production factors, the number of dairy cattle in Arkansas has steadily decreased. According to the National Agricultural Statistics Service, there were 482,000 head in 1943. By 1969, the number had dropped below 100,000 head and last year that number had declined to 15,000, NASS said.

News, Pages 11 on 09/23/2009

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