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croixflats

Milk prices. Whats driving the low prices.

88 posts in this topic

I am very concerned of the falling prices of milk. I am not a dairy farmer or know anyone in the feild but I am concerned for the dairy farmer.

As mentioned in another thread by BobT some dairy farmers are electing to sell off there cows for slaughter as it is to costly to go on feeding and raising the head for no return if any.

I have seen a couple of reports on the dairy industry.

One on the troubles they being confronted with.

Another about how cheese is flooding the market lowering the cost of milk. I guess in Minnesota something like 85% of milk marketed goes to making of cheese.

Other talk, just talk that is conspiracy you might say, is milk is being flooded into the market to lower prices in order to weed out the small dairy farmer.

Like I say I am concerned over this and I think bringing to light and discusion may help in some way or another.

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My neighbor about 2 miles away milks about 25 head-just the type you described. He said he loses about $30 every day he milks. He has no answers.

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I was talking to a farmer at the bar the other week. from what I got or kind of understood, he had been there for awhile. Is that farmers nationally are paid for their milk based on how far they are from Eau Claire, WI. So over here they all pretty much send theres to the cheese plants. No money in milk so make cheese. Might have to do a little research and see if this is true or what. It sucks that they dont get what they should.

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Yea, it does suck to see this happen. Every time I go buy milk I think of the farmer. Geese, I went to buy some milk and it went for $1.74. Sounds weird hearing myself complain about low prices.

Heck if I can pay for a case of diet cola I sure can pay the price of gallon of milk that supports the efforts of the farmer.

I know this is taboo for capitalism and free enterprise and all that and I dont want to make this into an argument about capitalism or protectionism but this is a good case where setting a minimum price standard could be warranted.

I see the pitfalls in that but something is gonna have to be done or many family owned farms will go under if this keeps up to much longer.

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Just wait until the flatulence tax (cap and trade) kicks in. The milk prices will go up but the small farmers will be done.

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MM, that is a very small operation by today's standards. My grandpa, from the late 1920s into the 1980s in SW Wisconsin, milked 22 head using corn, silage and hay from a 160-acre farm for feed. That small an operation worked then, but it really only worked even then because my grandma cared for the pigs and chickens and 1-acre garden and orchards, so there was little food the family needed to buy. And for all that, Grandpa made extra money by doing tuberculosis testing periodically on herds all across Crawford County.

Today, such a small operation would have little chance for success, specifically because its fixed costs are high enough that it can't survive strong dips in the dairy products market. Such fixed costs as a percentage of revenue decrease proportionally the larger your operation is, which is why the big ones can survive the bad times.

Another way some dairy farmers are diversifying their revenue streams (like one of my uncles) is by raising beef cattle as well as dairy.

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Steve,I wish I could type well enough to describe it all to you. This fellow is about 50,never been married,inherited the farm from his folks so it's paid for and he also has about 120 acres which is utilized to feed the herd and raise a small cash crop.

The farm hasn't changed much at all since the 50's-same equipment/tractors,buildings.

I stopped by there the other night while he was milking:the old surge pipeline system bellowing out that familiar sound,in the parlor it's warm,humid. And cats! everywhere you look there's a cat-maybe 50 of them. The parlor has a low ceiling and is dimly lit by about 6 bare light bulbs which are yellowed with gunk from flies and humidity.

I'd point out a cat-any one of them-and he had a name for each! He'd pick it up and say "ya,this is little bullet" or whatever. I asked "why that name-little bullet?" he said that little gray cat climbed into the 3" tailpipe on his Powerstroke Diesel,and when he fired it up,the kitten shot out like a little bullet.

If you can imagine the barn,the man,and the whole set up from 1960,this place still looks just like that.

Hmmmmm,maybe this could be a photo opportunity that I'm overlooking?

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I know that picture very well. I remember the dairy farm I grew up on looked just that. I think before my uncle retired from the dairy operation, he was milking around 75 Holsteins.

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MM, that's the Wisconsin dairy farm environment I grew up in. All the details are there. Man, I'd have a great time reliving my youth through the lens on THAT farm. smilesmile

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I haven't looked lately, but as of a couple of weeks ago hog producers were in the same boat. Production cost exceeding wholesale prices. Part of that is due to people's wrongheaded fear of catching swine flu from pork.

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As it was said earlier now might be a good time for min prices. It was in the last farm bill to have the low cap of $16/hundred wieght but that was removed.

I know one couple whom have been dairy farmers since 1968. At this very moment they are getting paid less per hundred wieght than they did in 1968!! Now how many people could make ends meet if they were getting paid the same as thier profession was getting paid in 1968! It's insain and wrong, I would be happy to pay more for milk.

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Is it a supply and demand thing? I recall last year the increase in milk was due to the increase in gas to send it to the processing plant (or whatever, city slicker here).

Regardless you can't push out the farmer though, again one of those "what america was founded on" going the way of hard work and earn a living

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I don't know a ton about farming, but how much impact do the cooperate farms have on this as well?

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Quote:
I don't know a ton about farming, but how much impact do the cooperate farms have on this as well?

One word. Overproduction. I think you mean corporate farms? If so, yes, I'm sure that is a big factor, because size has a lot to do with the cost of production.

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Large corporations that can supply large quantities have become the necessity.

I remember when I started in the logging industry back in the late 70's. The outfit I worked for was typical of many loggers - one skidder and a couple tree fellers and you could make a living. There were three of us working. The trucks came in equipped with grapples for loading so we didn't have to load them. Try to do that today. Chances are you won't find a buyer for your product because you won't be able to produce enough product per day to satisfy their needs. You have basically one of two choices. Either act as a broker and secure contracts from many loggers and then talk to the buyers or get those many loggers to join you and create a large logging corporation, putting your finances together so you can buy big power tree fellers, skidders, slashers, etc. so you can mass-produce wood products fast enough to satisfy the buyers needs.

Due to the fact that until only recently, farmers were paid the same for grain crops as they were 40 years ago, it became impossible for a small farm to produce enough product with his small equipment to pencil out. It because necessary to think in terms of volume production rather than quality production. A single farmer couldn't afford the investment necessary to obtain the equippment needed so he incorporates to raise the funds to do so.

I have a small 80 acre hobby farm. I own everything free and clear so I have no overhead. Based on what I have learned by farming my land I tried to pencil out what it would take for me to produce enough that I could feel confident enough to quit my day job. One must remember that there are good years and there are bad years so you have to be able to prepare for the bad ones. With the equipment I currently own, it wouldn't be possible for me to till up enough ground fast enough to compete with mother nature. There wouldn't be enough hours in the day to get it done. The only way I could do it is to invest a tremendous amount of money in bigger and faster equipment. Of course, now I have overhead costs to consider and so I will have to take on even more acreage, which means more time, more money, and more risk. It became a never ending cycle. The only way to make it happen would be to incorporate and take on some partners to help finance the business.

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Logging and farming are both cost-driven businesses, although there are niche opportunities in both industries for smart small operators.

Price supports were mentioned earlier. The problem with price supports is that although they may help the small farmers stay in business, they probably actually benefit the larger scale farmers more, because of their lower production costs. So while the small farmer is struggling to meet his bills and keep his head above water, the large farmer might actually be making a profit and expanding even more. This has been my observation, anyway...

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How big does a cooperative have to be in order survive the down times. And is it the corporate driving the prices. Two entities buttin heads it looks like. One trying to stay alive the other finishing off the other either by actions taken by only doing business or by maliciously manipulating the market in order to get a bigger piece of the pie. Witch one a could not say.

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I suggested that of price supports and I did see the potential of the corporates advantage you pointed out swamptigger. But what can be done other than price support or riding out the storm. The more the bigger guy gets the harder it will be for family run business. The market will be monopolized in the name of money and the stock exchange. Instead of family owned farms we will have farms owned by shareholders. Is this a good way for the farm to go, the way of oil. executives running the dairy industry. I dont think the employees of these corporate farms are going to pay very well like oil pays theirs. Unless milk goes up in price to support the wages that will be demanded by employees and executives and shareholders.

As we have seen by other corporate led industry it is the responsibility of the company to show growth and viability of stock to the shareholders and that correlates to the public paying more for the product.

Is it better to have many small businesses reaping directly the benefits of hard work or is it better a few big companies controlling things and having a group people making money of the back of employees while just owning stock.

I'm rambling off here thoughts going threw my head, steer me back if this scenario cant happened or wont happen or if I am way off the mark.

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Gas and Diesel Fuel. The reason that Milk went so hi before is because of the higher cost of production.That money didn't really add to the farmers bottom line. It goes up and down quite often. It always seems to match the price of everything else (Actually A little lower then everything else confused) Its alot like the honey market for me when I was in it to win it so to speak. I always made just a little bit less then what I needed..... Dairy farmers are some of the (IF NOT THE) hardest working farmers out there and they get the shaft so much that if there still in it today they will deal with it and move on like they have for so many years in the past.Its nice to see others worried about the backbone of our country.Great topic wink.

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My hubby is the fourth generation to farm our land. While we are not a dairy farm, we do sell organic grain to a few organic dairy operations, and have many friends in the dairy business. I showed this thread to one of our dairy friends, and she was kind enough to send this reply, with full permission to post in full.

Quote:
Thanks, one of the main reasons for the terrible milk price is the price of the dollar. Right now our dollar is high compared to other currencies. Since most "stocks" of milk are in cheese (less perishable) and we usually sell a lot of that overseas, our export market has bottomed out. Hence why one poster commented "the markets are flooded with cheese" (but I don't think he understood the reason behind it, in reality cheese is just sitting in warehouses with no buyers). Like most livestock, dairy takes years to build up a herd and farmers are not quick to sell now fresh heifers that they have raised for 2 years (and invested a lot of feed and time in). Also when milk prices our low, beef prices are usually low as well, making slaughter less appealing. This makes market corrections very slow. Farmers also are stubborn and will "wait out the market" Which doesn't work if everyone does it. Dairy prices have about an 18 month cycle. It also doesn't help that us silly dairy farmers always are expanding our herds when the price of milk goes up, this makes the down swings even deeper. Our FBM is predicting $14.00/cwt milk price by Christmas. The future markets in Chicago are already showing promise. If grain prices stay low (compared to last year) dairy farmers should be in the black again this winter.

I can tell you, not all "corporate" dairy farms have an advantage. We had one cooperative dairy by our town that went bankrupt, simply due to poor management.

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Quote:

Is it better to have many small businesses reaping directly the benefits of hard work or is it better a few big companies controlling things and having a group people making money of the back of employees while just owning stock.

I think free enterprise and competition is a great thing, however, there is a point where growth, acquisitions, and expansions lead to a situation where a few large corporations control everything in a given industry. That is what used to be referred to as a monopoly - nowadays better known as "too big to fail"...

Take the healthcare industry for example. If there were twenty smaller insurance companies competing against each other instead of two or three, there would actually be some real competition, and we would all benefit from lower rates...

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Swamptiger I was thinking on those same lines.

Fishinchicks thankyou for sharing this with your friend and be sure to thank your friend for the valuable insight she has given.

A lot of my ramblings were my way of trying to learn. She and all posters have helped me clear things up. As Picklefarmer mentioned agriculture is the backbone of this country and I and others do acknowledge and greatly appreciate what you all do for us.

By opening a dialogue on a public forum is my way of showing my respect, appreciation and admiration. And also in hopes the conservation may be expanded beyond the forum and some good could come from it.

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Thanks, chicks! I hoped you'd be looking in on this one. Appreciate your own perspectives, and especially those from a current dairy farmer. Nothing like hearing it from the Holstein's mouth. winkwink

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Wow, what a great look at Dairy Farming. Great reply and great info.

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Yep, no idea about that stuff. Always good to hear it from the sources mouth.

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