Dairy farmers feeling the pinch as milk prices drop

Rick Barrett
Milwaukee Journal Sentinel

Milwaukee — Charlie Jones got into dairy farming four years ago when the industry was on the mend after one of the worst downturns in recent history. Now he’s getting a taste for what it’s like when milk prices plummet and profits become scarce.

Jones milks 140 cows. He and thousands of other Wisconsin farmers recently enjoyed high milk prices, only to see them drop more than 30 percent this year.

“I would say we are right at the break-even point now, or slightly below it. Treading water would be a good term to describe it,” Jones said.

“It’s like buying a house when the prices are high, and then the market crashes. You still have the house, and you have to make the payments, but it’s not worth as much.”

Much of the United States now has too much milk, partly from dairy farms expanding their herds during the high prices in 2014. That has led some operators to take dramatic steps to bring supply in line with demand.

Earlier this year, dairies in the Northeast and Michigan dumped more than 30 million pounds of milk into waste systems, according to the U.S. Department of Agriculture, because the processors lacked the capacity or markets to handle it.

There have been hints that milk dumping has been considered recently in Wisconsin, but so far it doesn’t seem to have happened, according to dairy industry experts.

“My understanding is the plants are running at full capacity,” said Brian Gould, an economist with the University of Wisconsin Center for Dairy Profitability.

This has been a difficult year for many dairy farmers and the rural economy they support.

Imagine having a business where your income drops 40 percent but many of your costs keep rising, said Joel Greeno, a farmer and president of Family Farm Defenders, a national organization based in Madison, Wis.

Fed up with the hard downturns in dairy prices, Greeno quit milking cows.

“You can’t survive paying $300 a bag for seed corn, and $600 a ton for fertilizer, and then have your milk price cut. ... It’s not magic money,” he said.

Milk prices are set by complicated formulas and are influenced by overseas markets.