Rough 2009 for dairy farmers

In his 20 years as a dairy farmer, Michael Orville has weathered rough patches of low prices for his milk and experienced good surpluses when prices were high. However in 2009, Orville said he was losing between $100 to $150 per day while milking his 100 to 150 cows.

Orville grew up in a dairy farm and remembers a time in Kansas where more than 2,300 farmers produced dairy products. Today, Orville spends time keeping up with agricultural statistics and news. He knows currently there are just more than 400 dairy farmers in the state, though the number of cows stayed the same.

No profit, a drop in milk prices and a large national supply with little international demand were major reasons some of Orville's dairy neighbors have quit the milk production business.

"There's a few of my neighbors, one of them was an elderly man that said, 'I'm done; it's not worth losing money,'" Orville said. "Another one of my neighbors told me, 'that this is too hard of work to be doing it for nothing.' He's selling his cows."

In his own blog, U.S. Secretary of Agriculture Tom Vilsack wrote on Dec. 17 that milk prices dropped 27 percent in 2009. At the beginning of 2009’s drop in prices, Kansas dairy farmers were selling their milk at $13 per hundred pounds (cwt) in April compared to $19.10 in 2008, according to the National Agricultural Statistics Service.

Nationally, milk prices hit a low of $11.30 per cwt in June and July. Since July, prices have been rising and milk has been selling at $15 per cwt in November.

"I know we went from $18 to $11 (per cwt) on average (in Kansas)," Orville said. "We really were not making any money, but as far as going hungry, we didn't do that either ... We're back to almost $16 a hundred weight. That can work for our operation though there are some operations that have trouble cash flowing that."


Congress recently passed an unprecedented bill in hopes to provide some relief to struggling dairy farmers. The 2010 Agriculture Appropriations Bill allowed for $290 million to be distributed to milk producers. Kansas' piece of that pie has been about $2.1 million for around 425 dairy farmers, Trish Halstead, Kansas Farm Service Agency spokeswoman, said.

According to a recent press release, the Dairy Economic Loss Assistance Payment (DELAP) program provided about 32 cents per cwt with a 6 million pound cap. At a maximum, dairy farmers received $19,200.

"We started making payments on the 21st of December and we had most of them made within in a couple days," Halstead said.

In her 15 years working on dairy policy, Jackie Klippenstein, Dairy Farmers of America vice president of industry and legislative affairs, said she has never seen anything like DELAP. The program may be helpful to some farmers, but too little to late for others, she said.

"Those funds were meant to help producers through this difficult time," Klippenstein said. "We're very grateful by those in congress that supported these funds and very gratefull for all the (U.S. Department of Agriculture) has done in support of our dairy producers."

Klippenstein explained a culmination of international and domestic factors have caused 2009's plummet of milk prices. In 2008, other major milk producing countries like New Zealand and Australia experienced droughts that opened the door for American milk farmers.

"We had increased our production, then this past year those countries came back online with their production as well," she said. "So we had too much production on the world market."

A rise of a new middle class in Middle Eastern countries during 2008's rise in oil price allowed parents to afford more dairy product for their children.

"So when the price of oil came back down, we lost a demand market that we had the year before," Klippenstein said.

Orville agreed with Klippenstien adding a new middle class in the Asian rim countries, particularly China, saw a rise and fall in milk demand.

The domestic financial lending crisis has not helped. Dairy farmers have struggled in securing operating loans from lenders, Klippenstein said. The recession has also hurt domestic demand for dairy products, she said, though demand is slowly rising again.

With prices steadily increasing again, Orville and Klippenstein remain hopeful for 2010. The domestic market for milk continues to rise, and Klippenstein said DFA and other dairy farmers are seeking new world wide strategies.

For full story please see Sunday's Times

© 2008 Southwest Times