*This story first appeared in The Budget’s March 21, 2018, Local Edition.
By Beverly Keller
The law of supply and demand works in two ways, and for dairy farmers across the country, demand is down and production is up which means rock-bottom prices paid for the raw material.
“Too many cows, lots of heifers coming up behind them, too much milk,” explained Dianne Shoemaker, Ohio State University Extension field specialist for dairy product economics. “It is a bleak picture for the next 12 months. Add in uncertainty about NAFTA and tariffs and there isn’t much to be hopeful about.”
The US Department of Agriculture is calling for an average payout of $16.05 per hundredweight for 2018. That is less than 2017’s price of $17.63 and 2016’s price of $16.30. The payout is already less than the cost of production for farmers.
Add into the equation that Dean Foods, which produces milk sold at Walmart and other big-box retailers, ended its contract with over 100 farmers in Ohio, Pennsylvania and beyond. The company noted Americans drink three gallons less per person than they did in 2010 and 11 gallons less than they did in 1975.
The impact on farmers is real as they struggle to make ends meet. While the cost of a gallon of milk at the store for $1.87 looks great for the family budget, the pennies getting back to the farmer for that gallon of milk don’t pay bills. Government subsidies have been options in the past along with specialized insurance policies that can bridge the gap between milk price paid and the cost to produce it. For some farmers, it has been the end of the line as the number of dairy cattle running through sale barns locally and across the country continues to go up. For others, it is a time to ride it out in hopes the price will change. The American Farm Bureau is currently working on a milk revenue program in hopes of solidifying the market.
Strasburg farmer Jim Rowe noted that many farmers are simply tapped out. “Somehow, some way we have to get this turned around,” he said. “We’ve had low milk prices before and years of struggle but the length of this downturn is a problem.”