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Why is cheddar getting cheaper? (+video)

The United States agriculture industry is reporting a surplus of dairy and other foods, driving down prices.

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    Richard Lednicky trims a block of three-year-old cheddar cheese before cutting it into smaller portions for packaging.
    Joanne Ciccarello/Staff/File
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It could be a great year for American cheese lovers.

Farmers and cheesemakers desperately need US consumers to eat more of it because a glut in production has led to the largest accumulation of ripened milk curds the country has seen in 30 years, the US Department of Agriculture (USDA) says. There is also too much butter, milk, grains, meat, and poultry piling up.

All this means that shoppers will pay less for these items, which could be a welcome relief after prices reached record highs in recent years largely because drought and disease in agricultural regions limited supply, as The Wall Street Journal points out.

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"Someone is going to eat all of this meat and dairy," Shayle Shagam, livestock analyst with the USDA told the Journal. "How much room do you have in your stomach?"

Ideally, each consumer would have enough room to eat three extra pounds of cheese this year to help clear out the surplus. It started building up a couple of years ago when high prices and opportunities to sell abroad seemed rosy. The country was flush with grain which lowered the cost for farmers to feed their livestock. These conditions encouraged many of them to expand production by buying more cows and building bigger barns.

But as the value of the dollar grew, while the Euro sank, fewer international buyers wanted American dairy, so supplies here piled up as production grew to record levels. The economic conditions in the European Union have also caused dairy prices there to plummet along with demand from European consumers. This means European producers have been sending tons of cheap cheese, butter and other dairy products here.

"Now we have a lot of products looking for a home in a smaller number of places,” as Ms. Shagam told the Journal.

These factors together are driving the lowest prices seen in years. European cheese is 20 percent cheaper than it was two years ago, according to The New York Daily News. Overall, cheese prices in April were 4.3 percent lower than a year ago, according to market-research firm IRI, as the Journal reports. Per pound, the price for cheese is averaging $1.45 to $1.50 this year, with the price for a pound of cheddar falling to a six-year low of $1.27 as of last week, reports the Journal.

Consumer beef prices are also expected to fall by 2 percent this year and pork prices by .5 percent.

A majority of the cheese surplus is of American cheese, with Swiss making up about 2 percent, and the rest is described by the government as "other," reports Bloomberg.

As Laura Downey, a cheesemonger in New York, commented in Modern Farmer

I think the surplus is really commodity cheese, not the artisan cheese pictured in the article. Block cheddars, pasteurized cheese product (American cheese) and mounds of commodity mozzarella that is used in fast food and to supply all the deli's across the US and the globe. That commodity cheese is low quality stuff and yes Europe doesn't want it.

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