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Farmers Running Out Of Time To Find New Markets
April 15, 2017

LA CRESCENT, Minn. — For more than 130 years, Richard Johnson’s family has farmed. Now that legacy is threatened by the glut of milk in the market.

Johnson said his family’s dairy operation, Pine Creek Farms, is one of about a dozen Minnesota dairies and several dozen Wisconsin farms that have received notice from Grassland Dairy Products of Greenland, Wis., that will be dropped by the company at the end of the month. According to the letter he received from Grassland, the butter and industrial dairy ingredients company was cutting production due to a loss of exports to Canada, the result of a pricing structure change that increased the costs of importing U.S. dairy goods.

Johnson’s grandfather settled near La Crescent in 1887, and his father took over the farm in 1935. He has been in the dairy business since 1979 and today milks 125 mostly Holstein cows with the help of his three sons and produces nearly 10,000 pounds of milk each day.

With only two weeks to go to find another buyer, Johnson said, he is starting to getting worried. He had already contacted several dozen other dairy buyers and none was interested in adding any more milk production.

“If we don’t find a place to sell, we will have to liquidate,” he said. “There is so much milk and cows out there, the price is very depressed.”

A glut of dairy products has been affecting dairy farmers for more than a year now, keeping prices low. During a visit to Westby, Wis., this past fall, former Agriculture Secretary Tom Vilsack announced actions the USDA would take to buy $20 million in cheese products in order to help with the oversupply in that market.

Grassland has sent more than 350 million pounds of ultra-filtered milk, a product with an elevated protein content that’s typically used in cheese production, to Canada each year for the past several years, but the company was informed last month the arrangement would be discontinued. Without a market for its product, Grassland officials said, they had to cut the amount of milk the company buys.

According to USDA statistics, dairy farmers in Minnesota and Wisconsin have produced as much as 3.3 billion pounds of milk each month during the past year. Despite the production volume, milk prices have come up somewhat in 2017, hovering around $18 to $19 per hundredweight compared with prices as low as $16 per hundredweight during the winter of 2016.

The market for dairy products is in a catch-22, Trempealeau County Extension agriculture agent Steve Okonek said early this year. The traditional response to a glut of product is to cull cows, but many farmers have high fixed costs, such as barns and parlors that cost money even if there are no animals, and he predicted production will continue to grow steadily, regardless of demand.

“There is more incentive to produce more,” he said. “If it’s not worth anything, you have to make a lot of it.”

From Johnson’s perspective, the biggest culprit in the overproduction of milk is the large supply of cheap labor, especially undocumented immigrants. Many of his neighbors employ Hispanic labor, he said, which allows them to increase production much more cheaply than his family farm can.

He also said he wasn’t too thrilled about companies’ reliance on foreign markets to sell their products. These kinds of markets aren’t very stable, he said, so when countries such as Canada change their tariffs or policies, it can have a big impact on the market.

“I’m very concerned about the future of the farm,” Johnson said. “Paul (my son) was looking forward to making a livelihood in this.”

By: Nathan Hansen
Source: LaCrosse Tribune


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