Dairy farmers struggle to make it on the farm because milk prices don’t pay the bills.
Ted Sheppard always loved the land. Living in southern Missouri, where crops were hard to come by but rocks and grass were plenty, he was looking to find a farming endeavor that would fit the terrain and rural lifestyle. So, in 1977 he settled on dairy farming. But after 40 years in the business, this Texas County dairyman fears there will be no next generation in dairying if milk prices do not improve.
“When we started out,” he told an audience at the Missouri Governor’s Conference on Agriculture, “it was the only way to pay for a farm in southern Missouri.” But today, it is tough.
Imagine, working in a business for almost 40 years, and today selling your product for just 25% more than when you first started. That is what is happening in the dairy industry. Low prices and costs to operate continuing to rise, creating a financial spreadsheet that many in Sheppard’s area cannot make work — so they are exiting the dairy business.
Exiting the business
When Sheppard started in dairying near Cabool, Texas County was home to 250 dairies. Today there are roughly 40. “Over the years, we have gone through a lot of sad times,” he shared. “Producers were selling as they aged out. Having to haul people’s cows off, and people were crying because they couldn’t make the bills. It has been devastating to the dairy industry.”
As a state, Missouri had 1,142 permitted dairy operations in 2015. That is a dramatic drop from the USDA Economic Research Service Dairy Yearbook for 1977, which showed there were 17,000 farm operations with dairy cattle on them. However, data back then accounts for those operations with even just one dairy cow on the farm.
1977 vs. 2016
Sheppard decided to look back to 1977 and see just what cost has done in relation to price. Remember, Sheppard was paid just 25% more just last month than in 1977. Here is what he found:
• Milk costs up 300%
• Feed increased 200%
• Milk replacement up 400%
• Barn supplies increased 450%
• Pickup truck costs 900% more
• Barn boots up 600%
• Milk insurance 1,200% higher
• Alfalfa seed up 1,000%
• Electric bill rose 50% (Shepherd considers that a bargain)
• TV was free
• Quarter-pounders up 400%
• A cup of coffee up 500% to 2,000%, depending on where you buy it
• Candy bar is 750% higher
• Can of soda up 800%
• Gallon of milk up 350%
“Think about that,” he said. “Our milk price at the farm gate is up 25%, and they sell it in the store for 350% higher than in 1977.”
As he struggled to speak, Sheppard went on. “If dairymen don’t start getting their share from the retail market” — he paused, collected himself and continued — “there is not going to be family dairies here in Missouri.”
Source: Missouri Ruralist