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Serving: OH
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BLEAK PROFITS: Since 2014 milk prices have been declining and dairy farmers profits and equity have been declining, as well.

59 Ohio dairy farmers call it quits in the last five months

The three-year slide in dairy prices has been too much for some to weather.

Ohio's dairy farmers are leaving the business at a higher than usual rate as milk prices continue to put a strain on their economic wellbeing.

Every year, some farmers retire and give up their dairy licenses, but there's been an uptick recently. In March 2018, there were 2,253 licensed dairy farms in Ohio — a drop of 59 farms in five months, according to Ohio State University.

"Farmers are deciding they can no longer dig any deeper into their equity to pay for what I call 'the privilege of milking cows,'" says Dianne Shoemaker, OSUE field specialist in dairy production economics. Profits for milk are low because the price that dairy farmers get paid for their milk has dipped in recent years. In 2014, dairy farmers nationwide basked in high prices. Worldwide demand was high, and the number of cows producing milk was comparatively low. Since then, milk prices have been steadily sliding, as have dairy farmers' profits.

Milk prices in 2014 averaged $23.16 per 100 pounds. So far this year the average is $14.43, a 38% drop. The supply of milk is outstripping the demand, by far, which is driving down the price.

"There's just so much excess milk right now, and it looks like that's going to continue to be the case for a while," Shoemaker says.

In Wayne County, the state's top dairy county, OSU Extension educator Rory Lewandowski is increasingly hearing about farmers selling their farms or their cows. And others are seeking out bank loans to continue operating.

"Nobody is doing really well in this situation," Lewandowski says. "Definitely people are depressed."

Some of the dairies in Mercer County that recently closed did so because making more of a profit would have required them to expand, purchase new buildings and modernize their milking equipment. The investment was too great a risk given the low prices, says Dennis Riethman, an OSU Extension educator in Mercer County. About a half dozen farms in that county recently closed.

"And I anticipate there will be more within the next year," Riethman adds.

Some Ohio dairy farmers are having to seek out new markets because Dean Foods, the second-largest dairy company in the United States, has announced that it will cut its contracts with 100 independent conventional dairy farmers in Ohio, Pennsylvania, New York, Indiana, Kentucky, Tennessee, North Carolina and South Carolina beginning May 31.

Also, milk cooperatives and independent milk processors have sent out letters in the past two years dropping some dairy farmers due to low demand and an oversupply of milk on the market, Shoemaker says. Previously, farmers typically were only dropped from cooperatives when they produced poor quality milk.

Dairy farmers no longer receive a bump up in pay for producing more milk in the fall, when the demand is typically highest and production lowest, Shoemaker says.

Once a farmer leaves the dairy business, it's not necessarily easy to get back in when the price of milk improves, Shoemaker says. That's because the farmer has spent years, even decades, developing a productive herd of cows and replacement heifers. If they are sold off, it can take just as long to get started again, she says. Or, if a farmer sells off the milking herd and keeps the replacement heifers, there's no income.

"And you've got all these mouths to feed," Shoemaker points out. "That's not usually an attractive option."

Dairy farmers can consider other ventures to make money on the farm, but the switch typically is not easy. A farmer raising field crops for a living needs to plant 1,000 to 2,000 acres to earn enough to rely solely on that income. With low prices for corn and soybeans, that's especially tough.

While organic milk and other products have gained in popularity in recent years and typically offer higher profits than traditional milk, the organic milk cooperatives that take on the independent milk suppliers have no openings right now, Shoemaker says.

Like the price of anything, what goes down must come back up — at some point. Demand for milk will increase. Or supply will decrease. Or a combination of the two.

"But," Shoemaker says, "we've been waiting three years for that to happen."

Source: OSUE

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