PLATTSBURGH — Milk prices have made a significant rebound from their devastating lows of a year ago, but high grain, fuel and fertilizer costs continue to make the dairy business a challenge.
As a result, local farmers who survived the recession and the milk-price collapse have found they must get bigger, more efficient or find a niche and produce value-added products to ensure success.
At least for now, however, things seem to be getting better.
"We're cautiously optimistic," said Don Dimock of Dimock Farms in Peru. He said experts are expecting that milk prices will continue to rise as demand increases in developing countries such as China and India. "A lot is due to exports, especially butter and milk powder," he added. "There's quite a world-wide demand now for our exports."
On the other hand, the cost of just about everything has gone up, including grain, fuel, fertilizer and chemicals. "The down side is the cost of feed," Dimock said. "All costs have increased. I guess that's the biggest challenge."
Dimock said he doesn't grow grain for feed, but grows a lot of corn for high-energy silage, and that has helped. "We've expanded some, but not a whole lot," he said of his farm, which currently has about 270 milking and dry cows. "Here in Peru, it's hard to find more land."
That leaves efficiency, and the Dimocks have worked hard to produce quality milk as cheaply as possible. They do a lot with computers, and have a herd-management system. They have been using better bulls and have a nutritionist who has helped upgrade the feeding program.
"The milk we produce, most gets made into cheese," he said, explaining that through the farmer-owned Agri-Mark cooperative and it's Cabot cheese brand, local farmers' products are sold all over the country.
"There's some profit from that," he said "We do take great pride in the quality of our milk. That's what makes for the better cheese. We've won several national awards."
Dimock's daughter-in-law, Mary, whose husband, Bruce, co-owns the farm, agreed that milk prices are up, but so is the cost of everything else. "Corn is terrible right now," she said. "So you have to be very selective about what you buy. You have to watch your pennies, just like everyone else."
She said it was a big challenge to make it through the recession and rock-bottom milk prices. "We borrowed money to pay the bills," she said. "Fortunately, we were in good standing enough to weather that kind of storm. It's not something everybody else could do."
Anita Deming, executive director of Cornell Cooperative Extension of Essex County, said milk prices are up to around $17.50 per hundredweight, back from their lows of $10.50 or $11 in 2009. But she also noted that corn prices are very high, with much of it going to exports and for making ethanol.
"Farmers don't want to save the planet all by themselves," she joked.
She said milk prices seem to run in a three to three-and-a-half year cycle. When prices are up, everyone makes a lot of milk. Then a surplus develops, she said, and prices plunge like a bungee cord until more farmers go out of business, supply drops and the price increases again. So far, no viable solution to this vicious cycle has been found.
Meanwhile, retailers control the prices of the product in the stores, and normal laws of supply and demand get skewed, especially in an industry where prices have been historically manipulated by government programs. And farmers can't hold supplies of the perishable product off the market and wait for prices to rise.
Also, milk products tend to be staples, and consumers don't by a lot more of them if the price goes down or a lot less of them when the price goes up. "So demand sort of stays steady," Deming said.
On the positive side, Deming also said that demand is increasing abroad as emerging economies become more prosperous, and that — coupled with a low dollar in the world currency markets — had created a lot of demand. "The world market makes a big difference," Deming said.
Locally, she said, many farmers had to go out of business, especially those with high debt loads, during the last difficult year. "It's been a lot of stress for everybody," she said.
Many farmers "sold off anything they could sell," but that didn't help much because "nothing was worth anything," Deming added.
Many also cut back on the ration part of the cost equation, going to a high-forage diet. But farmers must be careful with that, as milk output can be impacted.
The size of local dairy farms has changed, too, as dairy goes the way of mega pig and poultry farms, becoming much larger in size, maximized for efficiency and cow comfort.
A number of local dairy operations were purchased by Giroux Poultry as they expanded their operation to grow their own feed. Other farms merged together, and some expanded as kids went off to college, then came back to help run the farm, which had to be made larger to support more than one family.
The result has been fewer 80-cow dairies and more 800- to 1,000-cow operations. Some former owners have decided they'd rather be an employee on a farm than own their own with all the worries and responsibilities, and large farms require enough workers that they've been a good source of employment.
"Some people prefer not to be the owner," Deming said. "They do hire a lot of local people."
Mary Beth de Ondarza, dairy nutrition consultant with Paradox Nutrition, LLC, said that advances in feeding techniques have been a help to farmers. "For me, I think the strong trend has been in fiber and forage digestability," she said.
Previously, a cow had to be fed half forage and half grain, but now a diet of 65 to 70 percent forage is possible, saving feed costs.
With recent advances in varieties and growing techniques, forages have become more digestable and beneficial to cows' health, a win-win situation. "The cows are a lot healthier, and you don't have to feed them so much grain," she said.
Deming said it's tricky knowing exactly what kind of varieties to plant and when to harvest to achieve optimum results, and an educational process is required. "I think one of the things that's happened is farms are becoming more scientific every year," she said.
Also, farmers are finding that free-stall barns with lots of good air and creature comforts such as mats and sawdust help cows to be happier and thus more productive. "It's such a margin, you can't afford to have cows that are sick," Deming said, adding that if animals are standing on concrete with their heads in a restraint and they're uncomfortable, and with marginal feed, they're not producing well.
Many cows like to lie down and are so comfortable in free-stall barns that they have to be forced to go outside in the summer to face the hot sun and horse flies in the pasture. "Cows are like couch potatoes," Deming said. "They're not athletes like horses. This is the kind of life cows like to have."
Another tactic that some dairy farmers have taken as a way to stay profitable without having to get bigger has been producing value-added products such as cheeses, or going to a community supported agriculture (CSA) model that markets directly to consumers for a set fee. It works especially well for farmers who have a small barn and are unable, or don't want to, expand.
The small, organic, back-to-the-land approach has worked well in the North Country where many resources such as Adirondack Harvest and local farmers' markets are available for direct marketing to local consumers, stores, restaurants and chefs. "There's two philosophies. Both are great. It just depends on what you want to be," Deming said of the get bigger versus get smaller and more specialized debate.
Some small farms have switched from Holsteins to Jerseys. Cheese and some other products can be made more efficiently. "The Jerseys do have a higher percentage of protein and butter fat and they are a smaller animal," Deming said.
Special programs by Extension and others have also help get farmers through.
The 2008 federal farm bill reauthorized the Milk Income Loss Contract (MILC) program, which supports the dairy industry by providing payments to milk producers on a monthly basis when prices are low.
Also, Cooperative Extension has overseen "profit teams" formed from bankers, veterinarians, feed sellers and others who provide vital services to farmers but who may not individually see the big picture in determining what is best for a farmer.
"Everyone hears the same message at the same time," Deming said, and farmers don't feel like they're being pulled in different directions by their suppliers and servicers. "To have them all in the same room, they can all work together and they can work it out. Your whole advisory team understands what each others' issues are."
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