If there’s a year not to be a dairy farmer, 2018 is it.
2019?
2020?
They could be even worse.
“Farmers ask me whether they’ll ever see $20 milk again, and I say, ‘Oh course,’ said Cornell Cooperative Extension Dairy Specialist Dave Balbian.
“But it might be four or five years…and by then, the cost of production and everything else will be up too. So will we see $20 milk? Absolutely. But the truth probably won’t be the answer they want to hear.”
Dairy prices have been in the gutter for the last three or four years with things so bad in February that handlers including Agri-Mark sent out letters in milk checks sharing suicide prevention hotline phone numbers.
“Most farmers are doing what they can to minimize their losses with their day-to-day decisions,” Mr. Balbian said, “but just about everyone’s losing money. We’re seeing a lot of auctions from people who’ve decided to get out.”
But that can be a difficult decision to make both for emotional reasons and for financial ones and when farmers try to wait it out, they find their cows are worth less than they were even six months ago and their machinery is worthless.
“The waiting game…it’s a Catch 22,” Mr. Balbian said, and even more so for farmers who decide it’s their best option is to try to make more money by making more milk, because even that isn’t without consequence.
“One thing that’s different this time is that there are few if any options for where you sell your milk,” Mr. Balbian said. “It’s almost that if you have a market, you feel fortunate. No one’s taking on any more milk.”
It’s not quite all doom and gloom, though.
Overall, United States exports have been good and consumption of whole milk, cheese, yogurt, and ice cream are up as well.
There’s also a place for increasingly specific niche marketing; the list is long enough to make your head spin: conventional milk, organic milk, grassfed milk; grassfed, organic milk; GMO-free milk and now, A2 milk.
“It’s all in the marketing,” Mr. Balbian said, with the implication that if, for example, GMO-free milk is good, any milk that doesn’t carry that label must be bad.
“All milk is GMO-free,” Mr. Balbian said. “Most people probably don’t know what GMO means. But it’s a way to market milk,” that sometimes brings producers a premium.
“There are a lot of additional costs involved, but clearly, they’re not going to do it unless there’s some money to be made. Still, I don’t know how much more the market can be segmented.”
In Washington, Congress continues to debate the Farm Bill, which could have all sorts of consequences for dairy farmers.
One of the most important, Mr. Balbian said, is the United States’ relationship with Mexico.
“Few people realize that Mexico is the number one importer of dairy products from the US,” he said, “but our relationship with Mexico isn’t the best right now. The European Union has been talking to Mexico…if things really turn sour, the price of milk here could drop overnight. It could make what farmers are getting now look like great money.”
Mr. Balbian said he has no doubt that the market will sort itself out, but who’ll be left standing is les clear.
When prices are good, he said, super-sized dairies stand to make a lot of money; when prices fall, though, their income can crash; the 75-cow farm with an off-farm income health insurance and no debt could be the most resilient in the short-term.
“The last time things were this bad was 2009,” Mr. Balbian added. “They’re not quite that bad—yet—but we’ve been in this trough for so long…Things are piling up.”