Low prices squeezing dairy farmers

2009-02-21T23:00:00Z Low prices squeezing dairy farmersTOM LUTEY Of The Gazette Staff The Billings Gazette
February 21, 2009 11:00 pm  • 

The light burns bright in Roger Boender's milking shed long before bartenders in town announce last call. And it burns in the afternoon as children in nearby Worden board the bus to return home from school.

Such is the life of a dairy farmer milking cows twice a day, seven days a week. In between milkings, Boender farms. He doesn't mind the work, but lately the price he has paid for milk is getting so low, he's almost working for free. The price drop seems out of sync with the seasonal consumption of dairy products.

"Usually we see a drop when school ends" and hot lunch programs take three-month break, Boender said. "Typically around the holidays, Thanksgiving through December, we have higher prices because they're starting to make eggnog and more whipped cream, all that good stuff. It baffles me why milk took a dive like this."

Friday, the Chicago Mercantile Exchange listed the price for Class I dairy, the kind that goes in milk jugs, at $9.20 per hundred pounds, a low that Montana Milk Control Bureau Chief Monte Nick said he hasn't seen in 13 years or more. The state uses the figure to set the payout prices for Montana dairy farmers, who like farmers across the country, are struggling with high feed costs and lower profits.

Dairy prices are in free fall, driven downward by a global recession that has would-be foreign buyers struggling to afford U.S. milk prices and Americans dining out less, said Allison Specht, an American Farm Bureau Federation economist.

The downturn comes after a couple of years of near-record prices. That prosperity had the industry growing at steady rate of 2 percent a year just to keep up with demand. With the market suddenly down, farms in large diary states are taking their cows to slaughter.

"We sort of sitting on the prefect storm, so to speak," Specht said. "Our production is growing at the same time that demand is going down."

The industry's only bright spot is that household consumption of mike is up, but that increase hasn't been enough to counter the sagging food service sales, which counts for 40 percent of the country's dairy consumption. Restaurants, normally big buyers of cheese and butter, are putting less dairy on the plate.

"With the high cheese prices we felt this year, Pizza Hut started putting less cheese on its pizzas," Specht said.

But falling profits for dairy farmers, is not likely to mean lower prices for consumers buying milk by the jug. Suppliers aren't likely to lower prices in the only sector of the business where demand is up.

Boender knows people grow upset about the price of milk on the shelf, though the price seems less worrisome than the payment he's receiving, which is on the edge of not covering his bills.

"People go to the grocery store and pay, what's a pint of water cost? A buck?" the farmer said. "And they'll walk out of the store with a case of it. What's the cost of a gallon of milk?"

Farmers aren't the reason for the grocery price, he said. Farmers take whatever price they're given.

Boender sounds exasperated. It's after 4 p.m. His next milking is less than 10 hours away.

Copyright 2015 The Billings Gazette. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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