A conversation on milk prices 30-plus years ago has stayed with me, and current milk prices for dairy farmers brought it to mind. One of my very first paying jobs found me assisting a local dentist as he worked an emergency patient in to the schedule.
A kick to the face while milking his herd of Holsteins one early morning caused a chipped tooth and the need for an X-ray and exam. I had known this man and his family for years, as they represented family farming in a good light throughout the area.
As we finished up the tooth repair, the farmer asked for a mirror. With a wink to me and a smile on his face, he said to my boss, “Yep, it looks pretty good, though I’m thinking it could be better.
“And my teeth aren’t as perfectly white as I’d like them to be, and the X-ray didn’t show much of anything, so I’m going to dock your price by about 40 percent today. Now, next time, I might be willing to pay you more. We’ll just have to wait and see.”
Spirited exchange
A spirited exchange ensued. This intelligent — and ornery — dairy farmer then explained.
“Farmers are the only patients in your practice that are forced to buy retail and sell wholesale.”
Just the day before, this fellow had sold his wheat crop, and because it had been a dry year, it wasn’t the clean wheat crop he typically sold. The cash crop price was not at all what he expected, because he was docked for “this and that” — all factors out of his control. The price per bushel of wheat in 1980 was about $3.50.
Irrelevant factors
In essence, the conversation went something like this: “It didn’t matter how much my overhead is, or dang interest rates killing me, or the ridiculously high cost of fuel. It didn’t make one bit of difference that my grain head had to be replaced last month, costing far more than I ever thought I would have to pay.
“Now, if I was a typical businessman, I would take my other commodities and increase the price of those to meet my bills. My other commodity is milk, though, and guess what? I don’t have any control over how much it brings, either.
“There is no way for me to roll my expenses, tweak the balance sheet and pass along all of my costs in order to break even.”
He paid his bill that day, in full, with a grin and a grumble, saying he was going to the store to buy a loaf of whole wheat bread and couldn’t wait to see how much it cost per ounce.
Realities of farming
He made a very good case for the realities of farming, putting a face to the struggles of all farmers everywhere. At that time, there were numerous dairy farmers in every little community of this county, and in 1980 they earned $15 per hundredweight for their milk.
At that time, they got about 50 percent of the retail price that consumers paid at the store. Today, the base price for milk is $16 per hundredweight (roughly 9 gallons) and the farmer only sees about 25 percent of the retail price.
Soaring inputs
And the farmer still has no control over cash crop prices, as the input costs of doing business continue to soar. Current wheat price is $3.93 a bushel. There are far fewer family dairy farms, not many farm kids working for free, and no hope of finding cheap labor like there was in 1980.
Walk through any grocery store, and ask yourself why.
With dairy farmers basically seeing 1980 prices, why is the price of milk in stores as high as it is? Why is cheese continuing to climb higher than it has ever been? Yogurt, ice cream, and kefir all cost consumers a pretty penny. Add to the shopping cart a loaf of whole wheat bread and all of this would prompt anyone not connected to agriculture to think farmers are making a whole lot more money than they really are.
Yes, the profit is in the processing. It is the most maddening part of this picture, though, that the processors can be far more profitable, their manufacturing more streamlined, than in 1980, while dairy farmers supply the primary ingredient for every bit of it and struggle to pay 2016 bills with 1980 prices.
