Yesterday, at my local market, I purchased a gallon of generic 2% milk for $1.89 and a two-pound block of Tillamook cheddar for $4.99. Again, I wasn't finding falling prices at a WalMart Supercenter or buying off a pallet at Costco--just stopping at the little downtown Mount Vernon Red Apple. I haven't seen prices like this in years; farmers are getting about one dollar a gallon for their milk right now, so it had to filter through to the consumers eventually. Those farmers are also losing at least $0.25 for every gallon they produce. It takes almost two and a half gallons of milk to make a block of cheese, so the farmer-owners of the Tillamook Creamery have got to be hurting too (especially as their directors pursue growth in the desert and through acquisitions).
One year ago, consumers from the rest of the booming Pacific Rim were eagerly buying a significant portion of the Northwest's milk products. Now, international demand has collapsed while Americans cut back on their cheese and ice cream. It's a perfect storm for dairy farmers, who can only hope for economic recovery and milk supply cuts from cooperative-funded cow-reduction programs. The stimulus package doesn't contain a dairy section, so we need people to respond as the economics textbooks predict--buy some more of that cheap cheese and enjoy it!