Can This Radical Approach to Dairies Save US Farms?

[HDRider]

As the latest crisis in American dairy enters its fifth year, the word "desperate" has begun to pepper the descriptions of a situation that started off horrible in 2014—with plummeting milk prices due to one more in a long line of gluts—and has worsened ever since. California, the country's largest dairy-producing state, is currently losing about one dairy farm a week. Wisconsin, the second-largest producer, is losing two a day; it lost 691 in 2018 alone.

So when the usually regulation-averse Wisconsin Farm Bureau Foundation (WFBF) announced in December that its 240 dairy delegates had voted to open up discussion of supply management—a program implemented in Canada some 50 years ago to stabilize prices for its own dairy farmers—it wasn't an enormous surprise.

At the root of the issue in the U.S.: Farmers are producing too much milk. When prices go down, they produce more milk to make up for the profit loss. When prices go up, they produce more milk to take advantage of the opportunity. The underlying premise of supply management is simple: Producers limit the amount of milk they put on the market—and therefore the number of cows, and the amount of feed required—so that it's in line what they believe consumers will purchase.

https://civileats.com/2019/03/11/can-this-radical-approach-to-dairies-save-us-farms/

 

[Red Bull Breeder]

Nope won't work. To many thinking they can milk a almond.

 

[farmerjan]

Nope won't work. To many thinking they can milk a almond.

But milking an almond is still much more expensive than some form of a controlled "quota" for farmers....

Farmers here in Va are talking some sort of "quota" system, like Canada's.... to keep the small farms in production and to provide a living wage to the farmer. One of the biggest problems is the location of farms compared to the markets. They may be crying "SURPLUS" but the processing plants here in Va and the surrounding areas CANNOT FIND enough milk to process. We are basically a "fluid milk market"; meaning that most of our milk goes for fluid (drinking) milk. The drivers juggle where they are taking loads because the plants cannot process enough milk to meet their needs.

The other thing is, some of the milk "buying" companies, are crying surplus out of one side of their mouth.... and offering a BONUS for farms that are big enough to ship a half or whole tankerload at a time. So the smaller farmer 50-150 cows, is getting hit from both sides. They charge them MORE for shipping than the bigger farms, and then they don't get the bonus price, which can amount to $.20 to $.40 PER Hundred pounds of milk shipped. So if a farmer is shipping something like 24,000 lbs he will get an EXTRA $.20 per hundred for his milk. If he ships over 48,000 he gets $.40 per hundred bonus. That's an extra 700 month just for the bonus on a 24,000 pickup....

They don't want to make the stops to the smaller farms as it is too time consuming and "costs them". So now they are penalizing them. The "get bigger" thing has gone to extremes with the dairy farms. But they are driving the industry today. One of these days, someone is going to wake up and realize that they are not sustainable in the areas they are located. Often in mild climates, and pulling more water from aquifers, that are being depleted faster than they can ever be recharged. The amount of manure and waste produced is slowing contaminating our ground water and will eventually seep down into our aquifers and wells. The amount of feed needed that is not produced on site and is often trucked in, and then all the manure and such has to be trucked out... there are more consequences than what are being shown. We are facing it here with the huge number of poultry houses and from what I hear, there are many more in Tn and other areas. Places to "dispose of the waste" are a big deal now.

 

[YoungAngusCattle]

The same thing is kinda going on for us row croppers. Companys made equipment too big so 1 guy can cover a couple hundred acres a day so the big guys might as snatch up everything they can. Paying top dollar cash rent to do so because they deem it acceptable to make $10 an acre farming, so adding another 300 acres is not big deal if they can cover it in a day and they get a bigger discount on inputs the more acreage they have. However a small row crop farmer like me can't compete because its not cost effective for me to only make $10 an acre on a farm that will take me 2 or 3 days to cover on top of that I don't have the man power to even make it feasible.

The only difference with this is I think the dealerships realize they messed up because they aren't nearly selling the machinery they used to so they gotta make up the income difference by pricing machinery higher and parts higher. It just comes down to we are producing too much getting paid they same amount we did in the 80s, but the ground inputs have gone up 400% since the 80s. The only good thing about this is the big guys are going broke slowly trying to make their high dollar cash rent, it's really interesting to see a guy that used to run 8 combines get down to 2 from a different company because the last one learned the hard way to not lease him anymore equipment.

Back on topic, I have been preaching to everyone I know not to buy Walmart milk, because anyone that can sell milk for $1 a gallon doesn't have the best interest of the dairy farmers in mind.

 

[HDRider]

Something is going to pop somewhere.

 

[YoungAngusCattle]

Something is going to pop somewhere.

And when it does the big guys are going to be the first ones to go.

 

[Jogeephus]

I've been reading a book lately that goes into detail on certain foods and how these shaped national agricultural policies throughout the world. What I found interesting is there are several countries who have a lot of dairy cattle but milk is scarce because the dairymen choose to make cheese and other products on the farm rather than selling milk which is the cheapest product. According to the book, this has kept the dairy industry small and healthy in these countries and small dairymen can make a good living without having to run so many head since their profit margins are greatly increased. One small country produces 275 different varieties of cheese because of different environmental influences on production. Another point the book made is that cheese and other milk products aren't as perishable as the milk itself so the producer is not so affected in lulls in the milk market like what happens when schools are out and children are at home drinking sugary drinks.

I don't know if this is the solution but I think it would be a good start but I doubt it would ever happen in this country with the regulation and all the hoops one has to overcome to sell straight from farm to table. I think reducing the amount of vertical integration and government bureaucracy would be good for everyone in agriculture but I doubt it will happen.

 

[Stocker Steve]

Maybe. Organic milk slowed the decline here, but they are struggling now also.

Farmers are producing too much of everything. A difference with dairy is it much harder to work off farm, compared to crop or beef operations. So they are less resilient.

I spent some time on enterprise budgets this winter. If you are using mostly manure for fertilizer, have built up soil OM to where you get above average yields, bale or graze crop aftermath for livestock - - return to land and management with current low prices is still in the $100 to $200 per acre range. Land rent is $40 to $80 per acre. So you could cash flow about $100 per acre on rented ground, potentially more on deeded ground. Some people making reasonable profits out there.

There are still financial issues for new comers or young families - - "one time" start up costs, return on investment, and family living expense...

 

[HDRider]

I've been reading a book lately that goes into detail on certain foods and how these shaped national agricultural policies throughout the world. What I found interesting is there are several countries who have a lot of dairy cattle but milk is scarce because the dairymen choose to make cheese and other products on the farm rather than selling milk which is the cheapest product. According to the book, this has kept the dairy industry small and healthy in these countries and small dairymen can make a good living without having to run so many head since their profit margins are greatly increased. One small country produces 275 different varieties of cheese because of different environmental influences on production. Another point the book made is that cheese and other milk products aren't as perishable as the milk itself so the producer is not so affected in lulls in the milk market like what happens when schools are out and children are at home drinking sugary drinks.

I don't know if this is the solution but I think it would be a good start but I doubt it would ever happen in this country with the regulation and all the hoops one has to overcome to sell straight from farm to table. I think reducing the amount of vertical integration and government bureaucracy would be good for everyone in agriculture but I doubt it will happen.

Farmers and most small operators are regulated out of the market.

 

[Jogeephus]

Farmers and most small operators are regulated out of the market.

Maybe not completely regulated out but as a Dr. with the USDA once told me, "unless you find an agent willing to sit down with you and spend time with you going over what is and isn't important the shear volume of the paperwork will simply take the wind out of your sails and you will toss you hands up in disgust".

The other day my daughter who is about to graduate with a degree in nutrition was talking about a possible business venture which she feels would be good. She is pretty business savvy and her latest stock purchases have doubled in price in the last six months so she is pretty sharp and in tune with the wants and needs of her generation and IMO her idea was sound.

Her main concern wasn't where to get the cash, or how to set up the business but her main concern was how hard would it be to have to deal with the government and its bureaucracy. Her other choice is not to be an entrepreneur and do what her heart desires but to go work for a large established company so she won't have the stress.

 

[HDRider]

I hope she can find a way Jo

 

[Jogeephus]

I hope she can find a way Jo

I do too. I think she would be much happier working for herself but with all the bureaucratic headache will it be worth the squeeze? I think this decision is similar to deciding to hike the Appalachian trail. No doubt most would jump at the chance since it would be a great experience but it would definitely give one pause if they knew they'd have to carry some whining bytch on their back the whole trip.

 

[HDRider]

U.S. loses over 2,700 licensed dairy farms in 2018

The number of dairy farms in the U.S. has been sharply declining, and now a U.S. Department of Agriculture report has revealed by just how much. According to the data, the U.S. lost 2,731 (6.5%) licensed dairy farms from 2017 to 2018. The total number of dairy farms is now at 37,468.

The largest atrophy was seen in the Midwest and East. Although Wisconsin is still home to 8,500 farms, the state registered the largest decline, losing 590 farms during the year. Pennsylvania lost 370 farms, New York lost 280 and Michigan and Ohio both lost 230.

USDA reported that milk production fell slightly below expectations in December, and dairy cow slaughter levels remain above year-ago levels. As such, the agency lowered its 2019 milk production forecast by 400 million lb. to 219.7 billion lb. Still, this was an increase of more than 2 billion lb. from 2018 production.

https://www.feedstuffs.com/markets/us-loses-over-2700-licensed-dairy-farms-2018?NL=FP-005&Issue=FP-005_20190320_FP-005_527&sfvc4enews=42&cl=article_1_b&utm_rid=CPG02000000653941&utm_campaign=37016&utm_medium=email&elq2=566e317e68074854845389ac0e36bfe3

 

[farmerjan]

Lost another farm here in Va. Reg cows, had about 30 holsteins and 25 Brown Swiss, milking, plus young stock. Good genetics. He got hurt about a year ago, damage to his muscles and tendons in leg, surgery, and daughter came home to farm. Equipment getting worn out, daughter got offered a good job with benefits, he told her to take it there was no future with prices the way they have been. Got another commercial farmer talking about cows going so he doesn't have to plant corn this year. Milks about 125....
Got another that has all river bottom crop ground. Says they will make a decision by May if they can't get in to plant, they are selling out. Daughter came home to farm from college.
Prices might improve 1.00/cwt this year???? NOT GOOD.

 

[pdfangus]

I've been reading a book lately that goes into detail on certain foods and how these shaped national agricultural policies throughout the world. What I found interesting is there are several countries who have a lot of dairy cattle but milk is scarce because the dairymen choose to make cheese and other products on the farm rather than selling milk which is the cheapest product. According to the book, this has kept the dairy industry small and healthy in these countries and small dairymen can make a good living without having to run so many head since their profit margins are greatly increased. One small country produces 275 different varieties of cheese because of different environmental influences on production. Another point the book made is that cheese and other milk products aren't as perishable as the milk itself so the producer is not so affected in lulls in the milk market like what happens when schools are out and children are at home drinking sugary drinks.

I don't know if this is the solution but I think it would be a good start but I doubt it would ever happen in this country with the regulation and all the hoops one has to overcome to sell straight from farm to table. I think reducing the amount of vertical integration and government bureaucracy would be good for everyone in agriculture but I doubt it will happen.

problem is at least in our state....the regulatory burden which is put upon producers who wish to manufacture their own products is staggering. a few do it but it is costly....

 

[Stocker Steve]

Are these all conventional confinment dairy operations?
What is happening to the farm land?

 

[Jogeephus]

problem is at least in our state....the regulatory burden which is put upon producers who wish to manufacture their own products is staggering. a few do it but it is costly....

Same problem here and the regulations are so complicated that it depends on the inspector what is right and what is wrong. A good example of this is when our last president appointed a lady from New York city to run one of the food regulatory agencies and she claimed the use of cheese drying cheese boards was unsanitary and illegal and her opinion had small cheesemakers up in arms and many were going to be put out of business by her opinion. I don't know whatever happened or if she was over-ruled but this just goes to show how difficult it can be for a small operator who doesn't have the ear of a congressman to do business even though the facts are on their side since the use of cheese boards has been an accepted practice for centuries and is even a requirement when making certain cheeses in the European Union.

 

[farmerjan]

The regulations are constantly getting harder and harder to comply with because we "have to protect all the imbeciles from something terrible happening to them" rather than anyone taking responsibility for themselves. Remember the "hot coffee" BS with Mcdonalds and the customer suing because they got burned by HOT COFFEE? There is no common sense anymore.

The farmer that just sold out, his brother runs beef cattle also and they will work something out. At one time they milked 125 but the one brother didn't like milking, so he branched into beef, he did most of the crops and the dairy brother bought his corn silage etc from the beef brother. They helped each other some. The beef brother has a son that wants to be on the farm full time and they will need to expand their beef if that happens. Like 2 operations that complimented each other. The father had milked cows before and he still helps out. They are a bit out away from the more traveled areas, so I don't think they will be selling the land anytime soon.
The one that is wanting to get out this spring, will probably go to beef, maybe feeding steers or something. He has alot of hilly terrain, about 10 miles from the bustling city of Harrisonburg, so a little cushion with the narrow roads and such back there.
The one that is all river bottom crop ground, I don't know. They are very close to a big expanding area of businesses and homes and only about 5-6 miles from that, and I can foresee it going to development down the road once the grandfather is gone. Maybe going to beef also for awhile....
Where we are here we are close to I-81 and the growth is unbelievable. Land prices keep going up and I really think that in another 10 years, the farm we rent from the widow, that is sort of our home base, will wind up going for sale due to the proximity to the interstate and the commercial value of the land for businesses to be close to the interstate.
Have one dairy also sets adjacent to the interstate. Brothers about 60ish, no one to take it over. I look for them to go out in the next couple of years too. Milk 225 now. The state will pick up some of the farm for widening the interstate and such there.

 

[Jogeephus]

I hate to see places go and hate to see them turn into huge corporate operations. I remember as a child I would help my granddaddy milk the few milk cows he had and we would put the milk in those big metal milk containers and set them by the road for the milk guy to pick up every morning. Things changed and they stopped picking the milk up so he got out but his neighbor got into dairy in a big way. He's been out of it for over 30 years now because he wasn't "big enough". Dairy sold to a large company that bulldozed it all down and put a distribution center on it. I own the land that joins it and am constantly approached to sell but I don't want to see the land ruined in my lifetime.

 

[Son of Butch]

U.S. loses over 2,700 licensed dairy farms in 2018

The number of dairy farms in the U.S. has been sharply declining, and now a U.S. Department of Agriculture report has revealed by just how much. According to the data, the U.S. lost 2,731 (6.5%) licensed dairy farms from 2017 to 2018. The total number of dairy farms is now at 37,468.

The largest atrophy was seen in the Midwest and East.

USDA reported that milk production fell slightly below expectations in December, and dairy cow slaughter levels remain above year-ago levels. As such, the agency lowered its 2019 milk production forecast by 400 million lb. to 219.7 billion lb. Still, this was an increase of more than 2 billion lb. from 2018 production.

In 2018 the average Minnesota Dairy Farm income was $14,870 down from $47,800 five years ago. You have to go back to before 1995 to find the last year Mn Dairy Farm income was below $15,000.

Minnesota minimum wage $9.86 hr
40 hrs week x 52 weeks = 2,080 hrs
14,870 divided by 2,080 = $7.15 hr (plus no benefits)
48 hrs week = $5.95 hr

Yes sir, life is rough down on the farm.