What’s the scoop on the drought and heat wave drying up half the USA this summer? The Central Valley’s dairy operators know it has suddenly pushed the price of their feed to intolerable levels wilting the nation’s corn and soybean crops. And in the cities and towns across the country, people feel its hotter than they can remember.
This week NOAA confirmed they are right. July was the hottest month on record ever, some 3.3F degrees higher than the average in the 20th century.
What is the only thing left to do?
Scream for ice cream of course.Why not, July was national ice cream month anyway!
That is just what is happening says the CEO of Visalia-based California Dairies cooperative Andrei Mikhalevsky.
“Milk prices are about 30% higher than a month ago” says Mikhalevsky – boosted by a ”significant decline in ice cream supply and cream supply that has helped increase butterfat prices“ he says.In addition, the searing heat has also reduced milk supplies when cows,like the rest of us,don’t like to work so hard when its hot.
The upshot is the higher demand for these milk components coupled with reduced milk volume is helping dairymen survive a period of red ink – if they can hold on.
Indeed, the price of butter on the CME market has improved, rising from around $1.30/lb in mid-May to $1.73 August 8. That helps boost the overall milk check for dairymen although there is a significant lag time, says Mikhalevsky
“Right now it is devastating for our dairymen with the price they get for their milk is not even covering how much they have to pay for feed.”
About 9 percent of all the milk produced by U.S. dairy farmers is used to produce ice cream, contributing significantly to the economic well-being of the nation’s dairy industry. Summer ice cream production is about 50% higher than in December typically.
USDA says the biggest jump in frozen product sales has been in frozen yogurt,up 15% as of June 2012, compared to the year before.
Small operators are reporting big sales in places like Raleigh North Carolina notes a local business paper.
“The record-setting string of 100-degree days in the Triangle has meant a business boom for Yummy Monkey, an ice cream and frozen yogurt shop in Raleigh.
Chaz Evans says sales have been up about 60 percent this week over last as Raleigh endured nine days with triple-digit temperatures. “Our biggest seller as far as ice cream is probably the Carolina Crunch,” he said.
In the ice cream parlor business sector,Baskin Robbins recently reported a 4.6% same store sales increase at their stores owned by Dunkin’ Brands.
At the supermarket and drug stores of the nation sales of ice cream for the latest 12 week period ending July 8 – sales in dollars were up 2.63% for ice cream but up 22.4% for frozen yogurt says the industry tracking group Symphony IRI Group.
In the year ending April 2012, nearly two billion servings of ice cream were ordered at U.S. foodservice outlets, a figure that was up 2 percent from the same period the year prior, according to The NPD Group’s CREST research.
Still it looks like a rocky road for our dairymen. Despite higher milk prices, Mikhalevsky worries a continuation of $8 corn with a 15% smaller crop will hurt California diary operators although export sales of dairy products remains a bight spot. In the meantime, we could see more dairy operators throw in the towel, he worries.
For the rest of us, all you ice cream eaters might as well get your licks in.
