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Published August 13, 2009, 10:21 PM

Money is milking N.D. dairies dry

Dairy farmers struggle with low dairy prices

By: Blake Nicholson, Associated Press

MANDAN, N.D. — Milk prices have dropped so low that Kenton Holle could lose half a million dollars on his south central North Dakota dairy farm this year.

“These are definitely not times where it’s fun to get up in the mornings a lot of times,” the 54-year-old lifelong dairyman said.

Holle and other North Dakota dairy farmers packed a meeting room Thursday at a state Farmers Union conference on the woes in the dairy industry. The problems are nationwide, but in North Dakota, they come as officials struggle to keep the industry alive: Its demanding lifestyle isn’t attractive to many young farmers, and milk producers scattered in remote areas sometimes have a difficult time hauling their product to market.

The number of dairy farms in the state has plummeted from about 1,600 in 1990 to about 200, said Gary Hoffman, director of the State Dairy Coalition, a group formed six years ago to try to revive the industry in the state. The number of dairy cows has fallen in that time from 100,000 to fewer than 30,000.

With the collapse of milk prices in the past year, the problem is getting worse. North Dakota State University farm economist Dwight Aakre estimates farmers in the state will lose about $1,000 per cow this year if the situation does not improve.

Ole Johnson, who runs a 380-cow dairy with about 10 employees in central North Dakota, said his operation might be the next to fold.

“What we built in 20 years, we’re losing in six months,” he said, his voice cracking.

Milk producers around the country are struggling with high production costs even as milk prices have plummeted. The recession has reduced milk demand around the globe, creating a glut on the market.

The U.S. Department of Agriculture last month raised the price the government pays for milk and cheddar cheese to try to help farmers. But many milk producers say the $243 million price support program won’t be enough to save them.

Farmers on Thursday lobbied for the federal government to set a minimum milk price of $18 per hundred pounds — about double what they are receiving now. They also want Congress to find ways to boost exports, decrease imports of milk protein concentrates they said food companies are using in place of milk, and better monitor what they said is suspect speculation in commodity markets.

The farmers also said they need to do their own part by better promoting their product and reducing supply to meet demand.

The National Milk Producers Federation already runs a farmer-funded program in which dairy farmers are paid to reduce their herds to better balance supply with demand. But the program is voluntary, and some farmers believe a better method is needed — possibly similar to one in the sugar beet industry, where farmers must join co-ops to grow the crop and sometimes plow under portions of their fields to reduce supply.

“I would gladly flush 5 percent of my milk down the drain if I got a better price for the other 95 percent,” said Bill Riehl, 45, Raleigh, who has been in the dairy business his entire life. “Sugar beet farmers figured that out a long time ago.”