One less dairy farm in Wisconsin
‘It’s depressing to sit up in my truck and sell $2,000 to $3,000 cows for half that price, knowing that the owner was depending on the higher price to pay debts,” says longtime auctioneer Tom Bidlingmeier, of B&M Auctions at Browntown,
Tom and his son Cory were selling the 170 head of cattle owned by the Jeff "Alfalfa" Malkow Estate last Saturday at the farm located between Albany and Monticello. No, this was not a financially - based dispersal—as so many recent farm auctions have been—rather it was the result of the unexpected death of owner Jeff Malkow in early September.
“The terrible economics of the dairy industry has meant that dairy cow demand has dropped as farms leave dairying or are very cautious and we just don’t have the buyers at the dispersal sales,” Bidlingmaier continued.
Lots of talking
I talked with a number of the onlookers watching the sale and doing lot of talking, a common practice at on-the-farm auctions. It did not seem that most were there to buy, but rather were curious about demand, prices and sharing conversations with friends. All factors that have been prime reasons for attending farm auctions over the years.
I asked a buyer of several cows why he bought in light of the low milk price. “I bought three cows today to replace three that I had recently culled—I want to keep the barn full,” he said. “I know I’m not making much money from milk, but what are you going to do?”
Will it get better?
A younger couple were watching the sale closely but had not bought anything although the sale was nearing its end. In our conversation later, I learned that they milked 30 cows. Can you remain in dairying with just 30 cows, I asked?
The young farmer then admitted that his wife worked off the farm as an accountant. “I do a lot of tax work,” she said, “that helps.”
He then asked me the common and most important question: Dairy farming will get better won’t it? It always has in the past.
"History seems to indicate that,” I responded. “But it’s been a good while and the economics have not really gotten any better and there is still too much milk, but who knows?”
A neatly dressed young Amish family (mother, dad and four young children) seemed to be having a happy day, so I stopped them and asked if they had bought cows. “Yes, we bought seven head," the father said. “We just built a new barn addition and needed cows to fill it to the 30 head capacity.”
The top selling cow that afternoon went for $1200 with most selling in the $800 - $900 range: bred heifers had a top of $1150 with the $700 - $900 range common and open heifers going for $400 to $600.
Biddlingmeier commented that a group of Holstein steers topped at $1125 with many bringing $800 and up. “It’s rare when you see feeder steers bringing more than bred heifers,” he says. But it happened today. Feeder cattle are the only livestock selling well these days.”
Glen and Linda Malkow have three other children: David, Brian and Debra all who are employed elsewhere and won’t be farming, says Glen Malkow, Jeff’s father.
”The Malkow farm will remain a family farm with an empty dairy barn," he says. “We’ll rent out the land (320 acres on the home farm, 364 acres nearby and 51 acres Jeff had bought just a few days prior to his death). And, we have 6000 bushels of corn from last year that has to be shelled.
Jeff was “old time” in many ways and picked and stored the corn on the cob and shelled it as needed.
As a result of Jeff’s death there is one less dairy farm in Wisconsin and it’s obvious from the number of dairy herds listed in the auction market ads posted in Wisconsin’s three farm papers that there is a major move out of dairying.
Many reasons why
A dairy dispersal can happen for many reasons: Older farmers taking retirement earlier than planned rather than adding needed buildings or equipment; smaller herds realizing that without getting bigger their future is dim so they get out while still retaining equity that can help with a new start in another life; and parents without family members who can take over the farm and don’t want to hire full-time help.
It’s the economics
Whatever the reasons, with economics being the major and most obvious one, the number of dairy farms is shrinking all across the country with states seeking ways to help dairy farmers survive. But, the farmers themselves can do little, they are the producers of milk (efficiently, pure and healthy and profitable), not the marketers. Tariffs, changing consumer preferences, farm bills and politics are beyond their direct control.
Changes and challenges
Like it or not, dairy farming has been in a major change mode for several decades perhaps dating back to the mid-1970’s when Californian Doug Maddox became the first mega dairyman with over 1000 cows at one location. Soon after, dairy producers nationwide turned the milking over to employees and expansion boomed. Herds with thousands of cows sprung up everywhere and the milk supply became a flood. Competition in the form of almond, soy and oat milk appeared and milk consumption slowed but cheese production and eating boomed.
It’s often been said that the mega dairies will always prosper—not quite true. The September 29th auction of 6000 Holstein cows and 4000 replacement heifers by Overland Stockyard at Hanford,California says otherwise. The auction is at the former South Lakes Dairy at Cocharan. Several years ago the owners applied for financial reorganization (Chapter 11) kept dairying and finally sold the farm. The new owners are switching to Jerseys.
Lost Valley Farm a 10,000 cow dairy in Oregon, has been in trouble since its start in the spring of 2017. Earlier this summer Rabobank had sought to foreclose on the herd to regain the $67 million it was owed. Owner Greg te Velded filed for Chapter 11 which delayed any sale. Meanwhile the dairy violated waste management rules and has been cited repeatedly for wastewater problems by ODA, and was ordered to shut down. But, it apparently never did. A judge recently ordered the farm to come up with a new plan to get into compliance. It’s a mess.
Overland Stockyards has sold the herds of a number of large dairies in California, New Mexico and Arizona who had financial problems. Size alone does not guarantee success.
Meanwhile, the dairy export market is in a state of maybe, perhaps and possibly with higher tariffs making for minimal optimism and no immediate feeling of major sales increases. The new Farm Bill has a September 30 completion deadline (which it will miss) and the Class III cheese milk price (which is the basis for farmer milk prices) is averaging $14.44, the lowest since the $14.41 of 2010.
Milking cows at best is not an easy profession and today’s economics make it even more difficult. Will times get better? No one knows but there is a lot of “hope” across dairyland. Should the dairy industry take a close look at sugar beet farming that flourishes in North Dakota and Minnesota? Maybe.
John Oncken is owner of Oncken Communications. He can be reached at 608-572-0747, or email him at email@example.com.