Dropping milk prices good news? Not for Minnesota's dairy farmers

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Things haven't been easy for Minnesota's farmers recently, with a disappointing 2014 corn harvest and, now, dropping milk prices.

Last month, the U.S. Department of Agriculture forecast a "significant" decline in dairy product prices, Capital Press reports. The agricultural news site says they aren't expected to begin inching up again until the early 2020s.

It might sound like good news if you enjoy a bowl of cereal every morning, but it could have serious consequences for those who make their living in the dairy industry, and not just here in Minnesota.

According to the Wall Street Journal, dairy farmers across the world are now facing lower profit margins, reduced herd sizes, and "price wars" over their products.

So what's happening out there? According to MPR News, China is cutting back on milk imports by about $1 billion, and the European Union is removing a production cap that previously limited the output of Europe's dairy farmers, leading to increased supply and competition.

The station says the global changes are already showing ripple effects here in Minnesota, with one dairy farmer in New Ulm reporting he's had to cut back on several expenditures (including farm equipment and feed) to make up for a profit shortfall.

MPR also notes things will be tougher on smaller, independent farmers, as big farms have proportionately lower production costs thanks to their massive output.

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