Milk Pricing question in PA

[stifflej]

OK, I know this may anger some people, but economically I just don't understand it. But I hear it alot in this neck of the woods. Local dairy farmers say that every time they milk their cows, they lose money. Soooooo, how can they stay in business, and second, more importantly, how can they afford to buy additional farms? And yes, I know it is happening? To me, you can't stay in business if you are losing money, let alone continue to grow? Can any one explain this to me?

Thanks.

[willow_girl]

The dairy farmer I work for rented a lot more land last year, planted corn and soybeans, and sold the surplus. The money from the crops is what's keeping him afloat right now.

[springvalley]

As Willow girl has said, crops right now are what are keeping dairy farmers going, so renting or buying more ground and selling the crops is making money that the cows aren`t. And most dairy farms are trying to hang on to what they have, hoping the price for milk will go up. They have so much in cattle and equipment, that if they sell out that is all gone, once you start jumping in and out of things every few years, you will never get ahead. Most of the time the good years and bad years balance out, but not as of late, been to many bad years. I myself am loosing money selling milk, but I enjoy my cows so much I hate the idea of getting rid of them. I may myself resort to selling cows and getting a job in town next year, things ain`t so good down on the ole dairy farm. And this is also what the Government wants is to get rid of the small dairy farms, then they can control the large mega dairies. You can bet on it, hold me to my word, the day will come the people in this country will be hungry and then the government will step in to "take care of us" ha ha . Enough said I need to get back to work, > Marc

[sammyd]

milk is at 16.
If you ain't making money at that then you need to get out.
Place I work at is doing quite well.
Buddy just bought 50 on milk check assignment in June, he's doing good.
I don't know anybody not making money in the dairy business at the moment.

[francismilker]

I'm not sure it's the fact that farmers cant make it at $16 per hundred wt, or if the days of $10 are still holding on tight to those that had to borrow heavily to stay afloat.

[triple divide]

Originally Posted by springvalley

As Willow girl has said, crops right now are what are keeping dairy farmers going, so renting or buying more ground and selling the crops is making money that the cows aren`t. And most dairy farms are trying to hang on to what they have, hoping the price for milk will go up. They have so much in cattle and equipment, that if they sell out that is all gone, once you start jumping in and out of things every few years, you will never get ahead. Most of the time the good years and bad years balance out, but not as of late, been to many bad years. I myself am loosing money selling milk, but I enjoy my cows so much I hate the idea of getting rid of them. I may myself resort to selling cows and getting a job in town next year, things ain`t so good down on the ole dairy farm. And this is also what the Government wants is to get rid of the small dairy farms, then they can control the large mega dairies. You can bet on it, hold me to my word, the day will come the people in this country will be hungry and then the government will step in to "take care of us" ha ha . Enough said I need to get back to work, > Marc

AMEN Marc! Preach on!

If you ain't happy makin' money @$16/c and on board with the LO'L program you better be marketing solo, vastly diversified, or independently wealthy to continue milking cows.

My father sold out when milk was almost $17.00/c without his premiums. That was nearly ten years ago. We were a grazing and grass forage operation before it was cool (before there was an internet as well...)

No independent not under the big boy's umbrella will be shipping milk. The economics of farming are already difficult enough if prices were good. These prices are impossible.

I feel for Marc and all the other families like him.

Not milking cows, if you have ever done it as a family business, is akin to a musician not being able to afford playing an instrument because he's not in a band.

[Gregg Alexander]

Marc
You are 100% right on the money. Milking cows for a living is going by the way side. We quit when milk was $14 /100 and cost of production was $17.25 /100. I still miss milking cows but no way I would ever get back in. Just is not worth the risk

[gone-a-milkin]

For people who might not know, the price they are quoting as '16'. That means the farmer gets $16 per hundred pounds of milk.

A hundred pounds of milk is approx. 11 and 3/4ths gallons.

Marc, all my best wishes to your family. Dairying is a rough business and I know you love your cows.

[rancher1913]

family dairies are going the way of family hog, chicken, and cattle feeders. you either are super huge or super small no inbetween anymore. a hog operation that makes a buck a hog with a million hogs is rich the guy with 200 hogs that bring a buck a head profit is poor. even the cow calf operators are getting squezed and if they ever figure how to grow a calf in a test tube there won't be a need for ranchers either.

[Creamers]

I think the only hope for small producers is the niche markets for local, green movement type producing, and there is ONLY a small base for that, sadly.

[springvalley]

I don`t know how many of you know my situation, but we were selling our milk through a regular milk company. With hopes of selling organic milk to a company, we had to transition our cows for a year, by feeding them organic feed. We did this for a whole year as told, we called the organic milk company to say we were ready to switch to them. I was told in not so many words, sorry we don`t need your milk as we have to much now. So we continued selling to our present milk company, they never did like my cows as they had to pay me way to much premiums for my milk as it is all Jersey milk. Well my field man came out last fall and said we are going to drop you because we understand you are selling raw milk off the farm to the public. I said yes I was and no intentions on stopping. He responded by saying it was a liability for them and they would no longer pick up my milk as of November 1st 2009. Turns out the field man lied to me as the haulers had changed and they were going to pickup with a semi, and didn`t want to stop at such a small stop to pick up milk. I have been turned down by several other milk companies for the same reasoning. So as of last fall we have been selling raw milk off the farm, up and down in my sales, one weeek good, several weeks not so good. It has been a hit and miss adventure to say the least. My goal is to sell 20 to 30 gallon per day, and most days come no where near that. Afew days I can sell that much, but hit and miss is the norm. I keep telling my customers to spread the word as in Illinois we cannot advertise, If I could I would no doubt be able to sell what I need to. We bought nine head of pigs this spring when the cows started calving and with all the calves, they drank alot of extra milk. But now with winter coming and snow I know some of my customers will not make the trip to get milk. We have a wide area of customers driving two hours or more from any direction from me. But I can`t get the most of them to come on a regular basis. Some do but most come when ever, very frustrating to say the least. Sorry to highjack the thread, but unless things change soon ole Marc is not going to be milking cows for a hobby much longer. Once again sorry for the long highjack, but I know some of you did not know what was going on with us here. And I know some of you on here will say good riddins, you shouldn`t be selling raw milk anyway. But I still say that raw is the best way. > Thanks Marc

[Callieslamb]

Good luck, Marc....glad you told us what was going on. It isn't easy anywhere. I toured a huge dairy near here last year. The manager said they were losing money every day. Govt subsidizing of grain crops was what was keeping them afloat. But I still don't see why they are milking. I as raised on a family dairy farm. There used to be a dairy every mile on the road to our house. Now there is no one dairying in that area. Just empty, crumbling dairy barns.

[gone-a-milkin]

Thanks for telling the whole story Marc. Did you ever get the milk company to tell you how much milk is their 'minimum' pick-up? You might have to go to some higher-ups to get that info.

This is the reason the Farmer Boss I work for tries to keep around a hundred head. He is on an established route, for now, but they talk of going to 3 day pick-ups or even 3 and a half. Then it is either get a bigger tank, or get rid of cows or ?? Oh, and no room for bigger tank w/o building a new room for it.

A lot of the 'gossip' comes from the driver, but he has his own stake in the deal. Your post is a good reminder of that fact. Also, there has been a big turn-over of field persons (not only men) in the last couple years. Each one says something different.

My heart goes out to you.

[Creamers]

But I still say that raw is the best way

100% behind that!

I am very sorry to hear all of that - what a shame

[Creamers]

You should contact the West A Price foundation and get your name on the private list they have - when a person contact a district coordinator, they can give them your info and you might get more clients that way.

[katy]

Marc, thank you for sharing, and no I didn't know about your predicament. It is infuriating when a company chooses less than honorable business practices and in this case the farmer gets hurt. As a child I lived and worked on a dairy farm for a couple of years, and came to love those cows........... good times, from a child's perspective. They lost the farm and hence I read a fair amount about dairies.

It appears that they have us where it hurts and the double standard just sucks.

Anyway I submit these numbers to you in an effort to learn, if you have time I would welcome your knowledge.


A FARMER'S MILK AND WHAT IT COST YOU

30 HOLSTEIN COWS
X 2 MILKINGS DAILY

= 60 MILKINGS DAILY
X 3 GALLONS EA

= 180 GALLONS A DAY
X 8 LBS EA GAL

=1,440 LBS OF MILK
X $ 16.

= $ 230.40 DAILY
X 30 DAYS

= $ 6,912. MONTH
X 12 MONTHS

## = $ 82,944 GROSS INCOME TO FARMER


NOW TO TRY AND PROVE THE MATH

180 GALLONS DAILY
X 30 DAYS

= 5,400 GALLONS A MONTH
X 12 MONTHS

** = 64,800 GALLONS ANNUAL
X $ 4. RETAIL

=$ 259,200. PAID BY CONSUMER

** 64,800 GALLONS ANNUAL
X 8 LBS EA GAL

= 518,400 LBS
X $ 16. PER CWT

## = $ 82,944 TO THE FARMER-- - WHO BY THE WAY, WORKS 7 DAYS A WEEK. =$ 1.33 per gallon


I KNOW THE NUMBERS ARE OFF A BIT BECAUSE I DON'T KNOW HOW MUCH MILKING TIME TO DEDUCT FOR THE FRESHENING.

[katy]

Originally Posted by stifflej

OK, I know this may anger some people, but economically I just don't understand it. But I hear it alot in this neck of the woods. Local dairy farmers say that every time they milk their cows, they lose money. Soooooo, how can they stay in business, and second, more importantly, how can they afford to buy additional farms? And yes, I know it is happening? To me, you can't stay in business if you are losing money, let alone continue to grow? Can any one explain this to me?

Thanks.

stifflej, One thing that comes to mind is a paper loss. Another is either a bad banking decision, poor record keeping, not purchasing feed and hay at quantity discount prices, wrong tax person............ actually the list could be quite long.

Now for the ones who are buying up more land, looks can be deceptive......... if it's financed and the banker / loan agent is slick there could be a wrap around mortgage -- also known as --blanket mortgage which means essentially refinancing the original farm and adding the new farm to the mortgaged amount AND at a higher interest rate, if anything goes bad wrong, the farmer loses it all.

The most sickening possibility is that the larger corporate farms, already using subsidy money from the good old taxpayer, simply adds the acreage and gets an even bigger subsidy on the next go-round. Subsidies are not for the small family farm, 80% of that money goes to 10% of the biggest corporate farms.

Hope that helps a bit. Now I will have to read a bit more on the cost of doing business for a dairy farm.

[triple divide]

Originally Posted by katy

A FARMER'S MILK AND WHAT IT COST YOU

= $ 6,912. MONTH
X 12 MONTHS

## = $ 82,944 GROSS INCOME TO FARMER
.

Katy,

Thanks for going through the trouble to explain all this. There is a small problem with your figures. Your cows are milking 12 mos./yr. Cows need roughly 60 days of dry time before they come fresh again.

Your gross figure needs to be adjusted to reflect +/- 10 mos. as total gross/ your example. I get a total gross of $69,720.

[sammyd]

Originally Posted by katy

Marc, thank you for sharing, and no I didn't know about your predicament. It is infuriating when a company chooses less than honorable business practices and in this case the farmer gets hurt. As a child I lived and worked on a dairy farm for a couple of years, and came to love those cows........... good times, from a child's perspective. They lost the farm and hence I read a fair amount about dairies.

It appears that they have us where it hurts and the double standard just sucks.

Anyway I submit these numbers to you in an effort to learn, if you have time I would welcome your knowledge.


A FARMER'S MILK AND WHAT IT COST YOU

30 HOLSTEIN COWS
X 2 MILKINGS DAILY

= 60 MILKINGS DAILY
X 3 GALLONS EA

= 180 GALLONS A DAY
X 8 LBS EA GAL

=1,440 LBS OF MILK
X $ 16.

= $ 230.40 DAILY
X 30 DAYS

= $ 6,912. MONTH
X 12 MONTHS

## = $ 82,944 GROSS INCOME TO FARMER


NOW TO TRY AND PROVE THE MATH

180 GALLONS DAILY
X 30 DAYS

= 5,400 GALLONS A MONTH
X 12 MONTHS

** = 64,800 GALLONS ANNUAL
X $ 4. RETAIL

=$ 259,200. PAID BY CONSUMER

** 64,800 GALLONS ANNUAL
X 8 LBS EA GAL

= 518,400 LBS
X $ 16. PER CWT

## = $ 82,944 TO THE FARMER-- - WHO BY THE WAY, WORKS 7 DAYS A WEEK. =$ 1.33 per gallon


I KNOW THE NUMBERS ARE OFF A BIT BECAUSE I DON'T KNOW HOW MUCH MILKING TIME TO DEDUCT FOR THE FRESHENING.

Most farmers understand that they are producing a commodity. The lowest denominator on the scale. Just like grain.

Farms are getting larger because that is how things work not because of some govt scam.
Businesses grow or they get out. Ford, Sears, Kraft they all have grown immensely from where they started. Farming in this day and age is a business, especially if you are selling to a commercial processor. You need to treat it as such.

Filling a niche market is great and I wish you the best of luck Marc in finding more folks who want to support their local farmer by buying your product.

[sammyd]

60 cows
x 50 pounds a day (for an average of 15,500 far below the national average)
x310 days in a lactation
= 930000 pounds of milk in a year
9300 cwt
x16 dollars/cwt
=148,800 per year gross.

74,400 for your 30 cow herd.
I don't pencil too much at 30 cows when I look at conventional milk and I usually use 12 as the price.