Milk prices concern dairy farmers
July 4, 2009
File photo Dairymen are getting $10 or a little less per 100-pounds of milk. Producing it costs $15 to $18, according to New Mexico State University Extension Dairy Specialist Robert Hagevoort.
Six months after the drop in milk prices, Roosevelt and Curry county dairy owners are still trying to wait out the slump.
In January, milk prices dropped to half of the prediction from six months before. On top of that, many dairymen are locked into high-priced feed contracts.
“I think it’s going to be really tough for the next four months,” said Alan Anderson of Anderson Dairy in Roosevelt County.
Anderson expects some dairies to go out of business in coming months.
One dairy has already filed bankruptcy and local agriculture leaders are predicting others will follow is something doesn’t happen soon to wholesale milk prices.
In early June, the Stepping Stone Dairy in Portales filed for Chapter 7 bankruptcy liquidation, citing $89,000 in assets and $3.2 million in liabilities.
Dairymen are getting $10 or a little less per 100-pounds of milk. Producing it costs $15 to $18, according to New Mexico State University Extension Dairy Specialist Robert Hagevoort.
And, even though feed prices dropped earlier this year, corn and soybean costs are rising again.
Hagevoort said low wholesale milk prices coupled with high input costs are unprecedented.
“What we’re going through is the perfect storm,” Hagevoort said.
Anderson thinks the industry may get a break next month and in September. But not enough to break even until possibly later in the year.
Feed prices will probably remain high until September, when the contracts come to an end, he said.
Anderson said dairies going out of business may help increase wholesale milk prices by actually decreasing supply.
The Cooperative Working Together program paid for by dairy producers also buys and sends entire dairy herds to slaughter to reduce milk production.
Meanwhile, store prices for dairy products haven’t dropped nearly as much as the amount producers are getting, which Hagevoort said is typical.
A drop in store prices could increase the demand somewhat, Hagevoort said. Dairy producers, however, have no control over how much they get for their product over store prices.
To get by, Anderson said dairy owners are borrowing money against the equity in