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Area cattle, dairy farmers adjust to change

by Jennifer Biller

STAFF WRITER

Buying milk and meat can be one of the best bargains shoppers get these days, experts say.

In the past half century, consumer milk prices have been lower than the average prices in the country due to the efficiency across the milk industry, said Professor Robert Jacobson of the agriculture economics department at Ohio State University.

While there has been some escalation of consumer meat prices over the years, meat is still economically priced in comparison to the world market, said Dwayne O'Dell, assistant director of marketing at the West Virginia Department of Agriculture.

"No one is making an exorbitant amount of money," Jacobson said.

That includes the farmer.

In 1989, a dairy farmer received $1.16 per gallon of milk sold and in 1999 that figure increased to $1.31, according to national agricultural statistics. In 1989, a beef farmer received 64 cents per pound of beef, but by 1998 received only 47 cents per pound, according to statistics.

The farmers' production costs have not decreased, however, said Dale King, statistician with the West Virginia Agriculture Statistic Service. Prices of lime, equipment, fertilizer and feed have continued to increase with the booming economy, he said.

"The farmer is one of the few who buys retail and sells wholesale," King said.

The prices the farmer receives for beef have gone down in part because there has been an increased supply to the market, King said.

"The drought is one of the reasons for the increased supply," King said. "Farmers didn't have the water and hay to sustain the animals so they had to send them to market. A lot more beef is available and that has driven down the price."

Contributing to the gap between the farm-to-store cost is the trend toward corporate farming, O'Dell said. Five major feedlots and three major slaughterhouses have the majority of control on the market, he said.

"Historically the farmer doesn't have real power in setting his price because it is typically set on down the line at the auction market, feedlot or slaughterhouse," O'Dell said.

Farmer Steve Stout of Young & Stout of Bridgeport has been in the business since 1942. He used to raise and slaughter cattle and sell them to local supermarkets. He now raises the cattle, sells them at auction and buys the processed meat from one of the big three slaughterhouses. Then he distributes it to local stores.

He has had to adapt to the changing market.

"I can't compete with someone killing 200,000 head of cattle a week, so I buy it back from the slaughterer," Stout said. "We used to do it all. Now it's cheaper to ship the cattle to the corn in the major feedlots rather than shipping the corn to the cattle."

It takes six pounds of feed to produce one pound of beef, according to O'Dell. Therefore, most of the cattle raised locally end up being sold at auction and sent to the Midwest feedlots, who can feed the cattle cheaply through volume, Stout said.

"It's not always fair," Stout said. "You get what you get and you take it or leave it. That is why there are so many farmers who have gone broke across the country."

Molly Dennison has been in the dairy business for 42 years. The owner of Dennison's Dairy Service buys milk from the corporate distributors such as Broughton Foods and United and then sells it to the smaller local stores.

"I'm just one of the little middlemen," she said. "My job is to take care of the smaller businesses. I sell to the mom and pop stops."

Dennison makes a quarter profit on each gallon of milk, she said.

"There is no substantial markup. I have to pay for trucks, drivers, and fuel, which is expensive. There is a lot of overhead," she said.

The main dynamic in the milk market is cheese, Jacobson said. A total of 165 billion pounds of milk will be produced in the nation in the year 2000, but only about one-third of that will be used as fluid milk, he said.

"Labor costs and utility costs have moved up faster than the farm value of milk," Jacobson said. "The best deal a consumer can make in West Virginia is buying a gallon of milk."

Danny Thomas, the owner of Foodland of Rosebud Plaza in Clarksburg, agrees.

"We're selling milk cheaper today than five years ago," he said.

On the average, milk sells for about $2.39 a gallon, but sometimes stores lower the price drastically to attract customers.

"When we do that we actually lose money because we pay about $2.07 a gallon and then sell it for $1.69. But it is a draw," Thomas said. "Milk is a very good price leader."

Staff writer Jennifer Biller can be reached at 626-1443.

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