Indiana losing several dairy farms each week
SOUTH BEND, Ind. (AP) - Dairy farmers are a hardy lot.
They get up early each day to tend to their animals and never stop working until the end of the day. For generations, hard work and common sense were about all that was needed to ensure dairy farmers could provide for their family.
But for the past few years, that formula has been failing, with literally several dairy farms shutting down in Indiana each week and about the same or even more in other dairy producing states, according to Doug Leman, executive director of the Indiana Dairy Producers.
In 2013, Indiana had about 1,425 licensed herds producing Grade A milk, but by the end of this year there will be fewer than 900 remaining, Leman said.
The Farmer's Exchange, a New Paris-based publication aimed at the region's agricultural community, has been chronicling the struggles of the industry and its inside pages have been filled with auction ads for farmers who have been giving up their herds, their equipment and sometimes their land.
"This has been going on for a few years now," said Jerry Goshert, editor of the newspaper. "It's moving into the crisis stage."
In most cases, those who are still hanging on have long exhausted their savings and are tapping into the equity of the land around them for loans to weather the storm, said Brian Houin, an owner of Plymouth-based Homestead Dairy and other nearby dairy operations.
Most haven't been making money for a few years, and Houin has the advantages of scale because he has about 4,800 milking cows and previously spent considerable money building the largest robotic milking operation in the United States to reduce labor costs and also ensure the animals had maximum freedom to choose when they wanted to be milked.
Just a few years prior, Homestead also built a methane digester that converts manure and other offal into enough electricity to power the farm and about 900 homes in the area. When the market finally turns around, he might even build a second unit.
But until then, some of the manure produced by the animals is squeezed until it is nearly dry and then heated and sanitized so it can be used as animal bedding that retains only a slight musty odor. The liquid portion is used to fertilize the 4,500 acres that are used to produce feed for the animals.
Nothing goes to waste.
In fact, Houin often attends conferences looking for new ideas and practices that might help the farm improve revenue or cut costs, and he said he improved his margins earlier this year when he started selling to a new Walmart processing plant that opened in Fort Wayne.
Besides efficiency, other key factors include how much debt a dairy operator brought into the downturn or how much equity they have to tap into for loans, said Leman, adding that some farmers have taken side jobs in an attempt to preserve the business or at least the land.
The U.S. dairy industry is struggling because demand for milk has been declining because more consumers are opting to drink what dairymen call juices but grocery stores label as "nut milks," which might be made from almonds, soy beans or even coconuts.
Tariffs also haven't helped, and there are additional factors at play.
But at the end of the day, dairymen have simply become too good at what they do, managing to produce ever increasing amounts of milk even as the number of cows is starting to decline, according to experts.
That's largely the result of years of careful monitoring to ensure only the best milk producers are bred for dairy purposes while cows might be selected to produce beef cattle.
According to the USDA, the U.S. dairy herd dropped slightly to 9.36 million in October, but the thinning has to continue to get supply in better balance with demand.
"There still are too many cows and too much milk," said Robert Kelly, Purdue extension director for Elkhart County. Beyond thinning the number of animals, the dairy industry also has to do a better jobs fighting back against the negative perceptions of the product, improve marketing and even develop new products.
"We have to do a better job encouraging the consumption of dairy products," he said. "We have to get people to understand that milk is good for you."
Houin and Kelly agreed very little has been done to change the marketing of dairy products for several decades, but that there are some positive examples, including the introduction of Greek-style yogurt and new milk products that are higher in protein or lactose-free.
Though Houin is hoping for a turnaround in the industry by the end of next year, the region will have lost a considerable number of dairy farms, many of which have been in the same families for generations.
"When farmers are losing money and the farm is at risk, they have to deal with difficult emotions and decisions," said Goshert, the editor of Farmer's Exchange. "There can be a lot of guilt associated with decisions, especially since it's a generational business."
Leman fell victim to the last big downturn in the dairy business in 2009 and eventually had to sell off the business he was planning to turn over to his children someday.
"Farmers are not typically the type of people who are willing to ask for help; it's a very difficult thing to do," he said.
Leman understands the anxiety and stress of losing money every day while working long hours can take a toll on your mind and body.
"There definitely was a time that I would not walk into the doctor's office, thinking that if something bad happened, my family would be better off without me," he said.
So instead, he opted to walk away and eventually found a position with the state dairy group while his sons found good jobs outside the family farm.
"There were many dark days during the worst of it," Leman said. "But by God's grace I got through and the good Lord has provided for me."