Milk money not enough

Price of commodity nosedives; local farmers feeling pinch

By Laura Mead

ESCANABA - The price of milk has taken a nosedive and dairy farmers nationwide are losing money on sales and struggling to cover operational expenses.

Local dairy farmers say this is the worst downturn they've experienced in decades, and some wonder if their dairy operations may be nearing an end.

Nationwide statistics show the price of milk is down 50 percent from last year, and is at the lowest in nearly a decade.

Benny Herioux, Herioux Farms in Bark River, has owned his dairy farm for 40 years, but said he may no longer be able to stay in operation if the situation doesn't improve.

"We're at 52 percent of what we were a year ago," he said. "No business can take that kind of cut and survive very long. If something doesn't turn around quick it's going to put us out of business. So far, I haven't even seen a glimmer of hope. Everyone's wondering what happens next."

According to nationwide statistics, the average price of Class 3 milk (milk used for solids such as cheese) in 2007 was $18.04 per hundredweight (unit equal to one-twentieth of a ton) its peak price. Last year the average price was $17.44. The average price from January through February of this year is $10.33 the lowest price since 2001. Herioux said in the beginning of June, the price of cheese hit a 30-year low.

"Dairy farmers are definitely feeling the pinch," said MSU Extension Educator Warren Schauer. "The prices have been way down since last winter, and although they've rebounded a bit since then, they're not anywhere near to the prices they were last year. Some of the input costs have gone down but again, not nearly as much as the price of milk."

Al Gareau, Gladstone, who has been a dairy farmer for 60 years, said there have tough times in the past, but this is the worst he can remember.

"Milk prices have dropped before, but the other stuff didn't cost so much then," he said. "Everything else is so high (in price). Insurance is so high now, repairs are just terrible. You just got to stay home and shrug you shoulders."

Like with many other industries, Schauer said the downturn in the dairy industry is a result of the downturn in the economy.

"People are spending and buying less at the grocery store and are eating out less," he explained.

In the Upper Peninsula, dairy farming is the main agricultural industry, and for most dairy farmers, selling milk is their only source of income.

"Not many farmers have an off-farm source of money, since farming is a 365-day a year commitment," said Schauer.

In order to get by, Herioux and Gareau said they both been cutting costs down to the bone.

Barbara Barron, of Barron Farms in Gladstone, said they have taken many cost-saving measures over the years, such as growing crops for feed rather than buying it, and not housing their cattle. Despite having few overhead costs, she said it still is a struggle to deal with the lack of returns from milk sales.

Barbara's son, Mitchell Barron, said they've begun shutting down their operations in the winter months because they're actually losing money on it. Since they don't make any money during the winter, Barbara said they have to make sure they've saved enough money to make it through those four months.

"It takes a lot of creativity and entrepreneurship," she said.