There’s no good time to be a dairy farmer, but some times are worse than others.
Like now.
Low milk prices, coupled with a late, wet spring that will impact feed and the stress of trickle-down niche marketing will likely combine for another rough year for the industry, said Cornell Cooperative Extension Dairy Specialist Dave Balbian.
Make that rough years.
“It’s going to turn around—eventually,” Mr. Balbian said.
“But until then, the farmers who can take it on the chin the longest, they’re going to be the ones who survive.”
Milk prices for May 2017 averaged about $14.50 a hundred pounds—about $1 more than a year ago, but nearly even with ’16’s average of $14.35 per hundred pounds for the year, and still low.
Part of that is because Canada’s closed its border to milk from the United States, Mr. Balbian said.
But just as important a factor is the over-production of milk across the country and the lack of processing facilities in the Northeast.
“The coops and handlers, no one’s taking on any new farms,” he said. “They have all the milk they need—or more.”
And while in the past, farmers could sometimes negotiate more for their milk by switching handlers, “Anyone who has a home for their milk just needs to sit tight and be glad they do,” Mr. Balbian said.
Add to that the fact that many handlers are deducting “market adjustments” from farmers’ checks to help correct the situation and the economics are even worse.
In recent years, Mr. Balbian said, milk prices have been following three-year cycles.
In 2006, they were so bad, even the experts said they couldn’t get any worse, he said.
“But 2009 was worse.”
2012 wasn’t much better—and feed prices skyrocketed.
Then came 2014, “A great year with record prices,” Mr. Balbian remembered.
Until 2015, when milk prices went off the rails. 2016 was even worse.
2017?
“The forecast is that by the end of the year, it will be a little better than ’16. Not as bad as ’09, but the pain has sustained itself. It’s just kind of stayed there,” Mr. Balbian said.
If prices are bad, the weather’s been worse; endless rain meant that for most farmers, the corn went in and the first cutting came off late.
The quality of the hay, in particular suffered, and many farmers will have to supplement their’s with additional feed to get through the winter.
Still, Mr. Balbian said, the economics are even more complicated than that.
Though hundreds of farmers have exited the industry over the last decade, those who remain tend to be the better managers who are taking advantage of technological advances to cut costs and improve nutrition; many are milking three times a day, and some are even using robots to do so.
“They’re producing more milk,” Mr. Balbian said. “Which is the best strategy for the individual--if not for the industry. Not too long ago, average production per cow was 16,500 to 17,000 pounds a year. Now, it’s 23,000. Who could have imagined?”
The solution isn’t something anyone wants to hear, because the answer to low milk prices “is low milk prices” with fewer farmers competing against each other.
There continue to be opportunities in niche markets like organic or grass-fed or even non-GMO milk, Mr. Balbian said, but too often, practices like those that used to bring bonuses eventually trickle down and become requirements for the traditional dairy industry.
“Regardless of production, most farmers are running in the red at some level,” Mr. Balbian said. “Add to that these other stresses…and though it’s going to turn around at some point, right now, it’s pretty nip and tuck.