Depressed farm economy has dairy farmers on edge

Colleen Kottke
Wisconsin State Farmer
Farmers young and old are feeling the strain of farming these days. Low milk prices, market uncertainty and a late spring planting season have put many on edge.

George Polzin's phone is awfully quiet these days.

The Cadott dairy farmer has sold breeding stock across the country for 50 years and says his ads in a local farm paper have failed to drum up much business in the past year.

"People don't have money," Polzin said. "The only ones that are buying are the ones that have to sell the bulls they have now. I'm certain that a number of my customers have gone out of business as well."

Polzin is a member of the Wisconsin Farmers Union Dairy Committee who shared their insights during a recent conference call, on the strife that low milk and commodity prices has created in the rural communities across the state and beyond. 

"Two weeks ago I attended a town hall meeting in Barron County sponsored by the Wisconsin Farmers Union and Farm Bureau and almost everyone in the room knew of someone who was not going to be able to get financing to put their crops in this year," said first generation dairy farmer Nial Murray of Barron County. "That's a horrible situation to be in. I know what it's like to not be able to obtain financing to even operate."

Char Croes said many farmers wait nervously each month for the milk check to arrive, wondering if there will be enough to pay the bills.

"The milk prices were so low last month that I couldn't pay the total feed bill which I like to keep up with," said Croes who farms with her husband, Jerry, in St. Croix County. "We finally paid off the fertilizer bill from last year. I told Jerry not to put on as much fertilizer as we did last year. "

With the taxes taken care off, Croes hopes the monthly milk check will stretch a bit further.

"We certainly won't be doing anything extra this year," she said.

Some farmers are so strapped for cash that they're hard-pressed to pay for necessities, including machinery repair.

"The repair business I'm running on my farm is a nightmare," said Polzin. "We have a list of 34 tractors that need to get in for repair. I told my mechanic to go over the list to see who we think can pay us."

Polzin who runs a diversified farm operation selling crops, breeding stock and milk, says this is the first time in his career that every facet of his business has slowed down.

"Over the past 40 years, every time the price of milk went down, I sold bulls like crazy. It didn't happen this year," he said.

Solutions not clear

Although Congress made several changes to the Margin Protection Program for Dairy, farmers say its far from being a safety net that it's proclaimed to be.

The MPP is a voluntary risk management program for dairy producers authorized by the 2014 Farm Bill through Dec. 31, 2018. The program is designed to offer protection to dairy producers when the difference between the all milk price and the average feed cost (the margin) falls below a certain dollar amount selected by the producer.

"I see the MPP as more of a band-aid and not a way to fix anything," said Belleville dairy farmer Bert Paris. "I don't like it when we must depend on the government to get us through this when we're supposed to be a sustainable industry."

Most farmers agreed that the MPP is overrated as a fix to the dairy industry's oversupply of milk which is driving down prices but putting some farmers at risk of going out of business.

"I think the MPP itself has been a failure from the start and I agree that they only way we're going to make our industry sustainable is by supply management," Murray said. "It's been proven around the world."

Supply management

In the three decades that he has been in business, Paris says he never dreamed that Wisconsin cheese factories would be turning away farmer's milk.

"For over 30 years we've been told to produce more and more milk and now we've reached the tipping point," Paris said. "In my opinion, the only way to fix this is to control the supply."

In mid-April, more than 50 groups from across the country — including the Wisconsin Farmers Union, Family Farm Defenders and the National Family Farm Coalition — asked Congress for emergency relief from the deepening troubles on small dairy farms.

Some want the government to set a minimum price that farmers would get for their milk — at a break-even point of $20 per hundred pounds, or about 11 gallons, compared with $13 paid in some months of the downturn.

Price County farmer Linda Ceylor says this stop-gap measure of a minimum price is ill-advised.

"Even if you did have a ceiling for the price, everyone would just say, 'Great, we have a $20 tap on milk, so we're just going to make more of it, because now you're guaranteed a price," she said. "Without any supply management, I think that would make the situation worse than it already is now."

Paris says he has heard of some cooperatives who have already begun implementing plans to control the supply of milk among their producers.

"I see that as a start of a way to take control of our own business and fix this ourselves rather than relying on the government or other people," he said.

Exports a losing game

According to the U.S. Dairy Export Council, milk from 1 in 7 trucks leaving American dairy farms ends up in products and ingredients sold overseas, proclaiming exports as a vital growth path for farmers and processors alike.

Murray disagrees.

"Exports have never brought long-term prosperity to the dairy industry. The high prices of 2014 came and left because of exports," he said. "We can't expect a person in southeast Asia who is making 56 cents an hour to be paying $3 a gallon for milk. Exports have only represented a place to get rid of excess milk."

With the state of today's dairy industry, some farmers wonder whether or not their children will have the same opportunity to farm.

Looking forward

With record milk prices of 2014 a distant memory, many farm families are finding it hard to imagine a future for their children in a dairy industry bombarded with volatile milk prices and a market awash with milk.

"My son has a masters degree in ag economics and would like to be the fifth generation to farm here, but there's no way we can figure out how he could make the same kind of money here that he's been offered elsewhere," Polzin said.

Murray said first generation dairy farmers who have started out from scratch are finding it hard to keep going because of the flooded markets and ensuing low milk prices.

"First and multi-generation farms are going through the same thing right now," Murray said. "What I'm seeing is that multi-generation farms are having to dump the previous generations' equity into the operation just to keep going."

Consumer outreach

Murray feels that part of the solution rests with farmers themselves.

"Consumer outreach is where we're really lacking," he said. "I talk to consumers who think the only guys out there milking 50 or 100 cow herds are organic farmers, and think that conventional milk only comes from 5000 cow dairies, and we're not there to disprove that notion."

Boosting consumer confidence is where farmers need to place their attention, he said.

"If we're going to do anything on the national level, we need consumers behind us," Murray said.

Marathon County producer Jim Briggs agrees. Prior to moving to Wisconsin, Briggs helped operate the family's milk bottling plant in Massachusetts. The 40-cow stanchion barn was open to the public where consumers were free to pet the cows or converse with employees during milking time.

"We had that connection and that's one of the things that drew people to buy our milk because they knew where it came from and could see the whole operation," he said. "Everything was transparent."

Briggs says he knows of several farmers who would love to form a small cooperative and do some on-farm processing.

"The strict regulations and investment is real discouraging to a lot of people," he said. "It's a mountain to climb, but I do think new products and high-end cheeses, milk and yogurt would be an asset to the industry."