Milk Intelligence Survey
May 17, 2016

Debt Load Weighs Heavy as Dairies Consider Long-term Survival

 |  By: Anna-Lisa Laca

Struggling to survive the dairy crisis of 2009 isn’t too distant a memory for many. Unfortunately, some farmers are reliving a similar nightmare right now.

Although the national picture is difficult to determine, a recent MILK Intelligence Survey* of large-dairy operators suggests many are struggling with debt. About 40% of the farmers responding to the survey said they can survive at their current milk price for only one year or less.

More than 43% said they are carrying more debt today than they did in 2009, when low milk prices and high feed costs wiped $10 billion from the dairy industry. While many farmers put away cash during 2014’s highs, others expanded or updated facilities.

The survey found an average milk price of $15.50 with 76% of respondents belonging to a co-op. A Wisconsin farmer reported the highest price at $20.10 with protein at 3.4% and butterfat at 4.1%. Two producers in New Mexico and one in Michigan reported the lowest price at $13.

Dairy farmers across the U.S. have been operating below the cost of production for several consecutive months, some as many as 14. Some are in good enough positions they are just putting off noncritical projects. One producer, who milks 4,300 cows, said: “We’ve put off a calf barn [and land tiling and hedgerow removal] till next year, but [we] are still building the next cow barn, as is our plan.”

Others are making tougher choices. One surveyed farmer wrote: “We didn’t need $26 two years ago; cannot pay the bills at $14. I wish something could be done.”