Commentary by Dianne Shoemaker/ OSU Extension Field Specialist
Since June 25, 66 more Ohio dairy farms have ceased milking cows. In three months, 3 percent of Ohio’s dairy herds are gone.
Since October 2017 — when there were 2,312 operating, licensed dairy farms in Ohio — 172 farms have quit milking, a decline of 7.4 percent of dairy farms in one year.
On Sept. 25, 2018, Ohio had 1,745 Grade A farms and 395 Grade M (Manufacturing Grade) farms, totaling 2,140 operating dairy farms.
Sadly, these numbers will continue to rise, as too many years of poor milk prices and unpredictable markets for milk, cull cows, breeding stock, and feed take their toll.
Never easy decision
As the industry faced a third year of poor prices, it is not surprising that more and more farms wisely chose to preserve hard-earned equity after cash reserves ran out.
That may seem a logical and straightforward decision when described in black and white text on a page. However, it does not begin to describe the challenge and heartache involved in making that decision by 172 farm families in the last year.
Many more farm families will consider the same decision over the next 12 months.
These families have invested lifetimes and dollars developing breeding stock and facilities to raise and care for their animals and crops. Lives have been centered around caring for cows, calves, and heifers. Life schedules were built around the needs of cows, calves and crops.
These lives are now dominated by questions:
- Will prices turn around?
- When will prices turn around? Surely, they can’t stay this low for much longer?
- What more can we cut?
- Why is this happening, not only in Ohio, but across the country?
Too much milk
I usually love numbers, but these numbers break my heart.
We simply have too many cows. The USDA/NASS August Milk Production Report showed there were still around 9.4 million dairy cows in the United States. Just like nothing good happens when teenagers are out after midnight, nothing good happens when there are more than 9 million cows making a reasonable amount of milk.
Backing up those cow numbers is a large replacement heifer herd.
The dairy industry has done a fabulous job exporting dairy products, and exports are critical in supporting the price received by US farmers. The current trade war and re-negotiation of NAFTA and other trade agreements have added even more uncertainty to volatile markets and dampened any hope for Class III milk prices much above $16 per hundredweight in the foreseeable future, if we even hit $16.
Through August, the 2018 Class III milk price averaged $14.44. Class III averaged $16.17 in 2017, following a poor $14.90 in 2016.
Compounding the ongoing uncertainty is the loss of most quality premiums offered by processors to attract and retain quality milk supplies. Add to that the unprecedented and increasing incidents of processors pink-slipping farms across the country.
Families are having difficult discussions and making wrenching decisions. Their decisions do not affect just themselves.
For every milk pump that is shut down after the last milking, there are employees that have to find another job, there is one less customer for a veterinary practice, a nutritionist, a feed mill, a custom harvester, a dairy supply business, a fuel supplier, a local elevator, a builder, an equipment company.
Each farm lost impacts a community.
Complicating the decision about when to sell a herd is the value of breeding stock today. The current market value of quality breeding animals is easily half of what it was a year ago. That alone is bleeding equity from balance sheets.
While it should improve over time, it makes finding a decent market for non-cull cows difficult, if not impossible, for exiting farms.
Families have to make the best decision for the family. They can milk cows until there is nothing left and someone else makes the decision for them. The smart families take a hard look at the whole picture and make decisions while they still have choices.
It can be very hard to see what life will be after the lights are turned out in the milk house for the last time, but farmers tend to underestimate the variety of skills and abilities that they have to offer to an employer or apply to the next venture.
More than 172 Ohio farms have pushed the numbers and decided to stop milking cows. It is not over.
My heart breaks.