Dairymen crying over spilled milk prices

Maybe this is what Willie and Waylon were thinking when they warned American “mommas” to not let their “babies to grow up to be cowboys:” Anyone with a dairy cow this year will lose, on average, $70 per month feeding and milking it; more if the cow is also packin’ debt.

Losing big

That means, in the Great White Washout of 2009, a moderately-sized dairy farm — say, a family operation with 200 cows — will lose nearly $170,000 making milk.

If the family has a banker as a partner, as 70 percent of all U.S. dairymen do, the family will likely lose more $1,000 per cow, or $200,000, this year.
The catastrophic losses mean people and cows are running, not walking, out milking parlors nationwide.

Vermont, where cows are as hallowed as their owners’ flintiness, has already lost 40 of its 1,000 dairies with hundreds more at risk. Pennsylvania officials estimate the state will lose 25 percent of its 7,400 dairy farmers before prices turn.

All of this calamity comes just two short years after farm milk prices made record highs, over $21 per one hundred pounds, or cwt., the farm unit all milk is sold by.

Half that

Today, prices are half that. In fact, in July 14 testimony before the House Ag Subcommittee on Livestock, Dairy and Poultry, Jim Miller, under secretary of agriculture for Farm and Foreign Ag Services, estimated this year’s on-farm milk price will average just $12.15 per cwt., the “lowest annual price received by farmers for milk since 1979.”

Contrast the price received for milk to the prices paid for making it. In his House testimony, Miller reported that feed costs alone — mind you, no labor, energy, insurance, land or taxes — in California, the nation’s largest milk producer, in May were $12.19 per cwt. That makes dairying a less-than-zero profession.

More importantly, says dairyman John Bunting, the folks exiting dairying because of today’s absurdly low prices are its younger, more-likely-to-be-indebted generation.

“In short,” he opines from his New York dairy barn July 15, “this nation currently seems to have public policy that favors dairy farmers over age 70 than those younger than 50. How do you think that’s going to work out in the coming years?”

Calamity

It will be a disaster—“an absolute calamity,” is how Bunting describes it — for consumers, processors and farmers because today’s sustained crushing prices will force younger farmers and older bankers alike to leave the dairying forever.

Miller, despite his bleak House testimony, believes milk prices will rebound to an average $15.60 in 2010.

In the meantime, he suggests, USDA’s current tools — government purchases of butter, cheese, and non-fat dry milk to boost support prices and fatten food aid programs, and MILC, the Milk Income Loss Contract program that will pay farmers an estimated $900 million this year — will, hopefully, give many farmers enough cash to make it through 2009’s train wreck.

Bunting, who maintains a lively blog at http://johnbuntingsjournal.blogspot.com/ and writes for The Milkweed, a Wisconsin-based monthly dairy newspaper, ain’t buying it.

This crack-up’s swiftness and severity, he says, shows U.S. milk policy for what it is: totally inadequate and completely opaque.

“No one in Washington knows how milk is priced anymore,” he says, “or how easily those prices are manipulated by the very few, very big dairy coops and processors. And because they don’t know, they can’t fix it.”

Two choices

Under the present policy, Bunting notes, dairy farmers have only two avenues when low prices strike — leave dairying or get more cows. The former is usually unacceptable, the latter “certainly shortsighted.”

He’s right; dairymen like him “got milk;” too much, in fact. What they have a shortage of, however, is leadership.

(Alan Guebert’s Farm and Food File is published weekly in more than 75 newspapers in North America. He can be contacted at agcomm@sbcglobal.net.)
© 2009 ag comm