Dairy Farmers Drown In Debt
The low, slow grind of milk prices over the past two years has many farms struggling to survive.
A new MILK Intelligence survey of dairy producers with 500 or more cows shows surviving 2018 could prove to be a challenge.
Roughly 72% of the producers surveyed say their business can survive at the current milk price for three years or less, yet 37% of them say they’ve only got one year to see things turn around.
“If milk price recovers even $1.25 from where it is now we will be fine,” one producer shared. “We locked in some good commodity prices, our production is good with very good components. While we are cautiously optimistic this can’t last much longer, we aren’t spending on anything we don’t need.”
When comparing debt loads to 2009, 61% of respondents said they have more debt now than they did then.
"If things don’t improve soon, we will sell next year,” one producer said.
California producer Jerry Texiera says it’s getting harder and harder to dairy in the Golden State. “Every month we are left with our heads spinning trying to figure out what we can sell just to make ends meet,” he says. “I really hope this industry changes, if it doesn’t then the majority of California dairies will go out of business.”
While most of the producers surveyed ship to a cooperative, a handful, 29%, ship their milk to a proprietary plant. An even smaller group, 7%, process their own milk.
Farmgate milk prices reported by the group ranged from $12.60 to $18. The average was $15.66 per cwt.