There’s a lot of crying over milk
April 7, 2009
On Monday, a gallon of milk cost $1.59 at the Park City Market. That’s only 40 cents more than a gallon of purified water.
While that’s good news for shoppers on a budget, it’s a death sentence to Summit County’s dairy farmers.
There are only a small scattering of operations still in business, and one less since April 3 when the Petersons in Marion sold off their last cow.
The problem is about as serious as cows chewing on wads of money instead of hay.
According to Sterling Banks, agricultural expert with the Utah State University Extension in Coalville, it costs more to produce milk right now than it sells for.
Dairy farmers measure milk in 100-pound units of sale. The current price keeps fluctuating just above or below $10. The cost to produce 100 lbs. of milk, on a national average, is about $15.
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Paul Peterson said it was costing him closer to $20. That, combined with the death of his father in December, meant it was time to leave the business.
"Some people sell off some of the herd, others grin and bear it till you get through," he said. "I’ll focus on custom farming."
Glen Brown, one of the owners of Brown’s Dairy near Coalville, said he’s just bearing it until June. That’s when he’ll know if he can stay open another year or not. Currently the dairy is the largest agricultural operation in all the county grossing over $1 million annually.
The special hay and alfalfa he buys to produce high quality milk cost $200 a ton last year. Unless it’s under $100 this year, he can’t operate. That’s a lot of money to come down in one year. The price of hay will be set the first or second week of June.
What confuses Brown, is how the price of milk could plummet 50 percent in a single year. His understanding is that the nation has a two to three percent surplus. That’s partly from over-production, partly due to declining demand because of the slow economy. Shouldn’t the price of milk then, be down around three percent?
David Ure’s dairy operation is slightly smaller than the Brown’s and faces the same challenges.
"You can turn an engine off to save gas money. You can’t turn a cow off from eating or producing milk. You have to kill it or hope it dies," he said.
Grain was at $300 a ton and is already dropping to $200. If hay comes down to $100, they should be able to weather the down market. National analysts are already predicting prices to increase to $14 per 100 lbs. by September and $16 by November. If that happens, they stand a chance, he said.
"That’ll be death starting with the fingers instead of the jugular," he explained.
Overall, it’s just not an easy time to live off the land.
Beef prices are also down. Europe, South Korea, Japan and China are all importing less of it. His own calves sold for about 20 cents less per pound this year than last. Those prices have put bigger operations out of business, he said.
Most of the farms still operating in Summit County are part-time. With used tractors typically only needed a few hours a week going for $250,000, it’s not realistic to do any kind of farming under 1,000 acres anymore, he said.
Boyd Willoughby runs a small goat operation in Coalville to supplement his income. Although his costs are lower, paying double or triple the price for hay and grain affects him too, he said.
At the February meeting of the Mountain States Meat Goat Association, he said, the topic of stopping production came up and was debated. He said his counterparts are confident things will improve enough to keep going, so he’s going to stick it out another year.