Americans guest speaker at Dairy meeting today

Bruce from Can.

Well-known Member
Darin Von Ruden , the president of the Wisconsin Dairy farmers Union, spoke to us today. Gave us a update on the current state of the dairy industry in his state. Told us Wisconsin is losing on average one dairy farm each day, and really cannot see how farmers can continue to produce milk at a price below the cost of production. He stated the average cost of production last year ran at $15.77 per hundred, while the average price paid to producers was $14.81. A very interesting talk given by a , active farmer.
 
Darin is a good guy, but kind of a "glass half empty" type.

Keep in mind WI has more dairy cows than all of Canada (1.2 million vs 959,000), and if we only lost 365 farms this year, that would be good. I'd be surprised it was that small of a number. There is plenty of attrition and consolidation going on.

This coming year will be harder than last.
 
So glad I got out when I did. I've only missed one high cycle in milk prices since I quit 14 years ago. Beef prices have been a whole bunch better relative to input costs.
The vet was here a few weeks ago. He said the dairy guys are really between a rock and a hard place. There's folks going out around here who I never thought would.
 
MI dairy is receiving a lot lower pay checks than WI, as the lack of plant capacity in MI has milk going a long way to find a home.... there is a plant near me that takes in 16 tankers a day of MI "distressed" milk, and no WI milk.
 
Must be doing ok here in MI yet, the foreigners have all been adding on, and still tearing everything up around here.
 
I would like to know where his cost of doing business figure came from. Anybody I talk to keeps mentioning 17.50-18.00 dollars per cwt as break even. I will admit I tend to talk to the smaller guys and not the ones milking 2-3 thousand cows or more.
 
You and I both had classes in Warren Hall, so you know as well as I the devil is in the details- did family living get figured in? Or principal payments? Did the milk price include other income streams like calves and cull cow sales? Not every analysis is the same. And if you really study it, you might find that the guy milking 3000 head has a very similar breakeven to the guy milking 90.
 
I've got three large dairies in my county and all of them are spending massive amounts of money to upsize.
I realize you've got to spend money to make money, but.....
 
Somebody must still be making money. Don't know how many huge operations there are in a sixty mile radius of Fort Collins, but there are two new very large daries being built right now about twenty or so miles away. One about a mile away keeps expanding.
 
That is one reason why I like the Farm Credit dairy surveys. Of course there are statistical biases there, too. I would imagine any dairy person would be encouraged to fill one out but more than likely anybody that can function w/o such a creditor will not be inclined to do so. Return to labor and management looks better when there is minimal interest paid out. Such as with a fuel supplier if that is not done as a cash account versus charge. Never mind interest on equipment purchases, seed and fertilizer, mortgage, and down the list.
 
Just wondering if dairy isn't going the same way as chickens and hogs. Back in the day everyone had diversified operations now its either big or small. Second thing to look at is the average age of farmers who wants to get in anymore but a lot are retiring.
 
Quota prices here are lower than I've seen them in over 15 years. Barely over 20 a kg here and not much moving. Most people's barns are full. There's lots that would like to add an addition on and milk a few more myself included but the math does not work under the current conditions. There's a few bigger guys here (250+) getting really big (4-600) but other than a few of them everyone else is pretty much holding tight. Our basically only dairy processor on PEI is finishing up a major expansion and they're starting to panic wondering where the extra milk is coming from. Most farms don't have the capacity to fill the almost 20% free quota we received in the last several years and the milk price will not fund expansions in most cases. Somethings gotta give,the market wants the milk that bad,give us a fair price to produce it and it'll come forward.
 
I do something similar with my tax accountant... Lake Shore Farm Management. They benchmark all of their clients, and you can see how you fit in.
 
Interesting comments philip, things are much different here in Ontario than in PEI. All Quota offered for sale on the exchange is snapped up each month, and most everyone is filling their quotas, and looking with eager anticipation at the competition of two new processing plants coming on stream in the next6 and 10 months. As you are part of the P5 , I know and understand some of your regional issues. Lots of new barns going up here, all around me, and we are in the early planning stages of a barn project ourselves. If we go forward with a new barn/expansion, it will not be for me, but the barn my son will need to stay in the game. And then I can still kick around thinking I am still a farmer too. Bruce
 
Many young farmers in our area ,but they can only farm if their parents make it happen for them. Many parents cash out , take the money and run, leaving the next generation to start from nothing, and that just isn?t possible anymore.
 
Yes it seems strange for sure. Are you guys looking at free stall or a tie stall again? I think some of the issues here is that there are a lot of producers that built new barns in the last few years already and are fairly debt loaded. The talk from Newbrunswick is quite similar.
 
I tell you what, in reading the articles in the hoards dairyman for the past years it looks like the entire US dairy industry about like a beached whale! Not dead but not going anywhere either!

All everyone seems to be worried about is exports for some reason, not how can we use it ourselves. The export market is closing fast, with China looking to improve there own industry by way of there homeland and also in a read in the HD, China is looking to improve places in Africa like Kenya and just ship the milk over to China. That will improve conditions in Africa in my eyes!

The last HD that came out had a story of Russia is looking to improve there own industry and make all the milk they need themselves by 2020 and they are on track.

Our mindset is sure wrong in this world, if a dairy farmer can't pay his bills then he thinks he needs more cows! And man alive these cows are sure putting out a lot of milk per cow anymore. We in North America figured out how to do that and now others are following suit.

Another problem around here is most of the big guys have the money from investors, and if it is like the investor that bought land just south of me back in the 80s, he said he bought it to lose money on it so he didn't have to pay so much in taxes from his business. My brother tried to go through FSA to get a loan to buy a farm, over a million dollars for it and they told him right there to find an investor, he didn't want to do that so he didn't get it. Enough rambling from me! LOL
 
Funny how farmers miss the point about basic economics.When any other industry has over supply and price drops they cut back on production but with farmers when there is an over supply and
price drop their answer is to produce more and then complain about not being able to make a living etc etc.
 
It's already there. Large confinement facilities aren't taking over,they already have.

By the way,did I say that raising beef was OK? I didn't mean it. We don't need anymore producers or cattle. You guys who are getting out of dairy,take the money and run.
 
I understand your situation BrownSwiss, you are a family farm like myself. And I also understand how the US needs to export surplus to make the existing system work. But continuing down down the current road is not sustainable in the long term, and simply uses the farmers equity to provide a cheaply priced product so processing, retailing, and consumers can benefit, at the farmers expense.
 

We sell tractor parts! We have the parts you need to repair your tractor - the right parts. Our low prices and years of research make us your best choice when you need parts. Shop Online Today.

Back
Top