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AGEC 314 Module #2 Articles Article #4 The drastic fluctuation of the dairy market in America seems to not be anything out of the ordinary. The main issue at hand is how the prices for whole milk and cheese products respond to price changes on farm milk. Whole milk and cheese retail price changes don’t always seem to match up with farm milk price changes. The way to identify how and why price changes are made is to look at the time table of the retail production process. While whole milk price changes don’t always follow farm milk price changes, there is correlation. Looking at the market, “changes in the farm value and retail price of whole milk tend to track relatively closely over time (to whole milk)” (Blayney 1). The reason that whole milk prices correlate with the farm milk price fluctuation can be derived by looking at the swift transition of farm milk to retail milk. Since this transition in production is done in just a few days, the changes in both products market prices tend to correlate. With the production of whole milk happening within just a few days, the price fluctuations happening in the farm milk market are quickly seen by the retail and production side. Cheese prices and the changes they take on from the market price of farm milk is interesting to say the least. The market price for retail cheese often times is not symmetric with the market for farm milk. This means if the price for farm milk increases, retail cheese prices may do the opposite and decrease. The reason for these non-correlated price fluctuations is relatively simple. The retail dairy product cheese has a, “lengthier process than fluid milk processing, and (it) may pass through several intermediaries before reaching retail outlets” (Blayney 1). The time it takes whole milk to be processed into cheese is exponentially higher compared to retail milk. With the longer amount of time it takes to turnover a product like cheese compared to processed milk, the change in market price for cheese will not be reflected right away. While the price of cheese may not be effected right away, each level of production will eventually adjust symmetrically to the price change in farm milk. One of the big social problems in the dairy market is the idea that the profit for farmers is not as high as the profit made by the production or marketing end. Whole milk prices tend to correlate with the changes made by farm milk prices. While cheese price changes take time, they follow farm milk price fluctuations. Given this, I think that the perception of dairy farmers being at a disadvantage is wrong. The price changes on both sides of the markets correlate over time,

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