cows
October 10, 2018

You’ve Shared Your Concerns

 |  By: Mike Opperman

One of the favorite parts of my job is having the opportunity to talk to dairy producers. It takes me back to my roots, having grown up on a dairy and worked on a dairy for several years. I also have unending admiration for dairy producers and the work and sacrifice that goes into managing a dairy, regardless of size.

For whatever reason, producers see me as an expert and take the time to share their stories and ask difficult questions. Recently I spoke with several producers at World Dairy Expo. Here’s what I learned.

Small dairies continue to struggle. I had the opportunity to have lunch with a producer who milks about 150 cows in in Wisconsin. He and his wife are in their mid 50’s and have managed the dairy all of their married lives. Their passion for dairy farming, the frustration with the current market situation, and the struggle to find a solution was palpable. He knows he needs to reinvest in his operation, but is afraid his processor will cut off his milk supply any day now, even though he sells milk to a coop. He thinks consumers view milk as a four-letter word, and is worried demand for the milk he produces will go south. Given the current situation, he and his wife have encouraged their two daughters not to come back to the farm, even though at least one of them would like to do so.

I ran into another friend of mine who milks about 200 cows in Iowa. He was at Expo to try and find a market for a high genomic heifer he has. The sale from that heifer would probably put them at break-even for the year. He wasn’t the usual jovial person I’ve come to know, given the pressure behind trying to make the sale happen.

Large dairies aren’t immune to the struggle. A 1,100-cow producer was happy that he will be able to cover farm expenses and depreciation just from his milk check this year. But to get there he culled a significant part of his heifer herd and took out all feed additives from his ration. We’ve heard of other producers following the same path. Let’s hope a short term fix doesn’t hamstring their ability to capture opportunities when and if milk prices do recover in the long term.

We also heard the unending rumors of certain large dairies going bankrupt. The current economic situation has gobbled up dairies regardless of size, but we don’t need more rumors about the demise of any producer. 

Canadians aren’t happy, either. A good friend of mine who is one of the larger producers in Canada called me after the agreement between the U.S. and Canada was announced. You could hear the disgust in his voice. “We were the trading block,” he says, suggesting that Class 7 pricing and greater market access were offered up to prevent a tariff on autos. He, like many Canadian producers, feels like the Canadian dairy industry was sacrificed in trade negotiations.

While he has ultimate respect for the U.S. dairy producer, he has disdain for the U.S. industry that continues with unencumbered milk production growth. There was frustration in his voice when he asked “When will supply and demand ever come into balance? How far does the U.S. cow herd have to drop before there is an impact? How much do you need to export to soak up the excess production? When will the U.S. stop producing beyond its means?”

As these conversations happened in the setting of World Dairy Expo, creating an almost surreal backdrop to the current market situation. The Exhibit Hall was once again full of companies offering the latest technologies and innovations claiming to improve producer productivity and profitability, while most producers struggle with the means to afford such opportunities. The barns were full of world-class dairy cattle that were beautiful to watch parade around the ring, yet are on the opposite spectrum of what most commercial producers would find viable in their own operations. At least for a few days in early October those producers at Expo could dare to dream about reinvesting in their operations, or breeding that one cow that stands at the front of the class.

What are your thoughts on the current market situation? Are you optimistic about the future? Let me know at mopperman@farmjournal.com

 

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