The dairy industry has entered a period of economic volatility of historic proportions. An era of modest fluctuation in milk and feed pricing in the late 1990s to the early 2000s was followed by increases in milk prices not seen before. This period of high dairy profitability was soon dampened because of substantial increases in production costs as a result of high fuel and feed costs as the USA government encouraged its farmers to produce corn for ethanol distillation. USA dairy product exports have been greatly reduced, leading to a precipitous drop in milk prices, which has not yet been followed by a decline in production costs.
Last full review/revision July 2011 by R. Page Dinsmore