Home Back Issues November 2009 Got milk glut? Dairies struggle

Got milk glut? Dairies struggle

| Print |  Email
Archives - November 2009
Wednesday, October 21, 2009

Oregon dairy farmers have been losing money since the financial crisis drove down milk prices last fall.

Farmers don’t see many options besides continuing to sell at a loss, since cows must be milked regularly and farms can’t cut costs without compromising their health and milk. No one wants to buy dairy cows, and selling cattle for ground beef is a last resort. Most farmers are now relying on credit and savings to stay in business.

A program created and funded by dairy producers offers buyouts to farmers who are ready to retire, but it has raised the price of milk by just $.71 per hundred pounds. The average price paid to Oregon dairy farmers in 2008 was $20.11 per hundred pounds of milk; the average for 2009 to date is $10.94. Most farmers need prices in the $15 range in order to break even.

A few Oregon farmers have gone out of business, says Jim Krahn, executive director of the Oregon Dairy Farmer’s Association. He expects more farmers will close down before prices stabilize at a sustainable level.

“I’ve essentially lost everything that I’ve worked for in the last 20 years,” says Louie Kazemeir of Rickreall Dairy in Polk County, where 1,600 cattle produce 4 million pounds of milk a month. Kazemeir estimates he’s losing between $6,000 and $8,000 a day, totaling $1.2 million so far in 2009.

The good news is that milk prices seem to have turned around; the futures market shows enough of an increase in November’s prices to make some farmers a profit. But even as farmers recover, complex subsidies and pricing formulas ensure that the industry will continue to boom and bust. The answer is more regulation, Kazemeir says.

“We need to get production controls across the country to avoid this again,” he says. Milk prices were low in 2005 but rose to historic highs in 2007, when farmers added cows to cash in. When prices dove back down, some farmers were still paying off the loans they had taken out to add capacity.

U.S. Agriculture Secretary Tom Vilsack said last month that the dairy industry must be restructured to be less volatile. In the meantime, dairy farmers are getting a modest bailout: $290 million in direct payments and $60 million for the government to buy cheese.

ADRIANNE JEFFRIES
 

Comments   

 
Cynthia Brink
0 #1 Milk prices and sustainablityCynthia Brink 2010-06-02 19:09:40
What is the current word on CSA for consumers to support local dairies that are sustainable? And how can the public become more aware of SARE and participants in these programs?
Quote | Report to administrator
 

More Articles

Two Sides of the Coin

Contributed Blogs
Wednesday, October 22, 2014
22 twosidesBY JASON NORRIS

Historically, when the leaves fall, so do the markets. This year, earnings, Europe, energy and Ebola have in common? Beyond alliteration, they are four factors that the investors are pointing to for this year’s seasonal volatility.


Read more...

Launch

September 2014
Tuesday, August 26, 2014
BY JESSICA RIDGWAY

September's Launch article features Orchid Health, BuddyUp and Inter-Europe Consulting.


Read more...

Shipping News

September 2014
Tuesday, August 26, 2014
BY JENNIFER MARGULIS

In 2012 The Dalles, a city of some 14,400 located 75 miles east of Portland and often seen as the poor cousin to adjacent Hood River, completed a massive project to revitalize its dock.


Read more...

Launch

October 2014
Thursday, September 25, 2014
BY JESSICA RIDGWAY

October's Launch article features Soul Kitchen, Easy Company and Slick's Big Time BBQ.


Read more...

Downtime

October 2014
Thursday, September 25, 2014
BY JESSICA RIDGWAY

I'm not very interesting,” says a modest Ray Di Carlo, CEO and executive producer of Bent Image Labs, an animation and visual effects studio.


Read more...

Podcast: Interview with Pete Friedes

Contributed Blogs
Wednesday, August 27, 2014

082714-thumb friedesbookTom Cox interviews Pete Friedes, author of "The 2R Manager," about becoming a Best Boss.


Read more...

A Recipe for Success

October 2014
Thursday, September 25, 2014
BY LINDA BAKER

Two businesswomen, two iconic food brands and one food-obsessed city. We thought this sounded like a recipe for good conversation. So in late August, Oregon Business sat down with Wendy Collie, CEO of New Seasons Market, and Kim Malek, owner of Salt & Straw, to discuss their rapidly expanding businesses and Oregon’s trendsetting food scene.


Read more...
Oregon Business magazinetitle-sponsored-links-02
SPONSORED LINKS