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Published April 25, 2010, 10:41 PM

N.D. dairy business gets milked dry by low prices, other factors

In the midst of what have been good years in agriculture generally this decade, the dairy business in North Dakota has nearly nose-dived. The number of dairy cows in the state is down 60 percent in the past 10 years alone, going from about 50,000 in 2000 to only 21,000 milking cows this month, falling 4,000 in just the past year, according to a U.S. Department of Agriculture report Friday.

By: Stephen J. Lee, Grand Forks Herald

In the midst of what have been good years in agriculture generally this decade, the dairy business in North Dakota has nearly nose-dived.

The number of dairy cows in the state is down 60 percent in the past 10 years alone, going from about 50,000 in 2000 to only 21,000 milking cows this month, falling 4,000 in just the past year, according to a U.S. Department of Agriculture report Friday.

That’s a far cry from the 700,000 dairy cows found in the state in 1934, according to USDA statistics. And no doubt the fewest since the 19th century.

Only a few years ago, industry boosters were aiming at getting to 100,000 cows over several years. But it hasn’t turned out that way.

Milk production in North Dakota during January, February and March totaled 94 million pounds, down 4 percent from the first quarter of 2009 and part of a long-term decline and probably the lowest production for the period in a century. Nationwide, milk production remained stable.

The number of dairy farmers in the state continues to shrink, too.

Gary Hoffman, executive director of the North Dakota Dairy Coalition, said Sunday that the number of dairy producers has gone from about 200 to about 183 just since September, several every month almost.

Just a decade ago, there were more than 700 dairy farmers in North Dakota.

“We have had some of the lowest prices in history,” he said. “It’s our job to grow the dairy industry and increase the number of cows, but during this economy, it’s been pretty tough.”

He’s recruiting people from other states and Canada all the time, selling them on the low labor and land prices in North Dakota.

There’s been some success, with a Dutch family moving down from Canada to open a big 750-cow dairy farm near Carrington, N.D. Another Canadian family moved down a few years ago to buy a similar-size dairy near Parshall, N.D., and is expanding it.

While the average dairy size keeps increasing, some still like it small.

A Pennsylvania family bought a farm near Linton, N.D., a few years ago and milks only 60 to 70 cows and is doing well, telling Hoffman recently they plan to build a new barn.

“It all depends on what you want,” Hoffman said.

But the imports aren’t keeping up to the number of dairy farmers retiring or going out of business across North Dakota.

Just this month, the large Five-Star dairy near Milnor, N.D., filed for bankruptcy, according to information from U.S. District Court in North Dakota. The 1,500-cow farm is part of the Dairy Dozen LTD., Veblen, S.D., that operates a handful of large dairies in South Dakota, North Dakota and Minnesota.

Another of the Dairy Dozen farms, Excel Dairy near Thief River Falls, also filed for bankruptcy, according to a federal court listing online.

Rick Millner of Veblen, S.D., a top official with Dairy Dozen, couldn’t be reached by telephone Sunday for comment.

The Sargent County Commission reported two years ago that the Five-Star Dairy near Milnor was out of compliance with the North Dakota Health Department regulations. Local farmers went to court to get paid by Five-Star for the grain they sold to the farm.

The 1,500-cow Excel dairy near Thief River Falls was declared a public health hazard last year because of its ongoing problems with manure pits. It’s been shut down for about a year.

All the negative news hurts, Hoffman said.

“Whenever there is talk of a new dairy coming in or starting up, that is the one they use as the reason why we should not have it,” Hoffman said. “It hurts the industry across the board. As a rule, 99 percent of our producers are doing an excellent job of taking care of waste management issue and the good-neighbor-type issues.”

Plus, the overall stressed economy the past two or three years also has slowed things.

“It’s been tough,” Hoffman said. “We have had numerous people who were thinking of coming to North Dakota and building new facilities or getting into used facilities. But since the economy went south, everyone has kind of put their plans on hold.”

Milk prices are at about $14.50 to $15 per hundredweight, about the break-even point for most dairy farmers, Hoffman said.

Higher quality milk, such as having more butterfat, can push the price up to $16 or more. Over the past decade, prices to the dairy farmer have swung from over $20 to about $10 per hundredweight.

The uncertainty has kept dairy producers from expanding, even when they have a permit for more cows, Hoffman said. “They are just sitting there, hoping they will survive.”

His six-year-old coalition holds its annual meeting May 21 in Mandan, N.D. One idea being tossed around is providing some sort of state-funded price supports for dairy farmers, he said. Other states have tried such things.

The Dairy Coalition is a private nonprofit supported partly by state agriculture department funding but mostly by rural electric cooperatives – which provide him office space - and crop commodity groups, “because we are some of their best customers,” Hoffman said.

Reach Lee at (701) 780-1237; (800) 477-6572, ext. 237; or send e-mail to slee@gfherald.com.

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