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Low milk prices affecting dairy-related businesses |
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By KRISTY HEMMINGSEN | East Texas Edition |
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November 7, 2002 -- For the past several months, it's been hard to find much cheerfulness in the dairy industry. While dairy farmers, including those in East Texas, continue to struggle financially because of low milk prices, the businesses that rely on the farms' success are also suffering - feed suppliers, veterinarians, dairy auctions, .... The fact is, when money is short in dairy farmers' checking accounts, the bills don't get paid as fast as everyone would like. Dairy farmers in this region are seeing a September price that is off 30 percent compared to the last three years, according to Dr. Blake Bennett, a Texas Cooperative Extension economist, Dallas. The last three years' average milk price in September was $14.25, but this September the price is hovering around $10. Karey Hunter with the Texas Milk Market Administrator's office in Carrollton noted a closer comparison. The 2001 average blend price that dairy farmers received averaged $15.50, and actually peaked at $17.60 in September 2001. "But it's been slowly dropping ever since," he said. Currently, according to Hunter, the blend price is $11.95. Part of the pricing problem is the amount of fluid milk on the market, agreed Hunter and Bennett. "Other than low prices, there is too much milk," Hunter said. "And the demand is lagging because of the economy," Bennett added. The "lag" in the dairy industry is certainly hitting home with those businesses supported by the dairy farmers. Dr. Hank Hayes, a veterinarian and co-partner of Dairy Health Services in Sulphur Springs, said, "We are busy as ever (sick cows still have to be tended to) but we're having a tough time with accounts receivable." Hayes said it's completely understandable and that he doesn't see it being the dairy farmer's fault. "There's just no money out there," he explained. "With the milk prices so low, dairy producers just don't have the money to pay their bills." Other views of the situation are similar from other dairy-related businesses. Marshall Clark of Crystal Feed Mills in Como stated his customers are having a hard time paying their bills and in his opinion he said, "It's just not fair to the dairymen and for anybody else." He also said a number of area dairies have gone out of business in the last 18 months which only decreases customer numbers for the mill. At last count, Hopkins County had 165 dairy farmers, compared to 173 at the same time last year. Wood County has 45 dairy farmers, compared to 46 at the same time last year. Another important thing Clark pointed out is that as the milk price goes down, the feed prices continue to go up. "The dairy industry needs more help, milk prices need to increase." David Fowler, co-owner of Sulphur Springs Livestock and Dairy Sale, said cattle prices are certainly not as high as they were a few months back before milk prices took "the plunge," but the situation is really nothing new compared to the past five or six years. He said whether it's fluctuating milk prices or drought conditions, these factors and others have been squeezing more and more farms out of business due to the lack of profitability. Presently, Fowler said, low sale prices are linked to every shape and size of dairy stock, including calves, heifers, fresh cows, etc. "Springers and fresh cows are about $200 to $400 cheaper than just a short time ago," he stated. Livestock market reports published in Country World show good fresh cows brining $1,000 to $1,500 in the Oct. 24 sale at Sulphur Springs, compared to $1,100 to $1,800 for the same type dairy cows at the May 30 sale. In attempt to increase dairy farmers' income, a 10-year, $73.5 billion Farm Bill package has been approved that renews the dairy price support program, along with many other items. And, recently, dairy farmers began receiving financial assistance through the Milk Income Loss Contract (MILC) program that began Aug. 13, which provides payments to a producer or producers on a dairy operation that have produced and marketed milk commercially in the United States since Dec. 1, 2001. But, the MILC program, which offers immediate financial help to milk producers hurt by fluctuating milk prices is merely a "bandage," according to Dr. Ellen Jordan, a Texas Cooperative Extension dairy specialist. Jordan said the program is helpful, but according to the producers she has addressed, it doesn't solve the entire low milk price situation. One key thing is the milk prices have been so low, for so long. She said more solutions are needed because "the bleeding continues. "This situation has really made it hard for dairy producers, and they are going to have to really keep an eye on things," she explained. "Producers are going to have to evaluate every aspect of the business and make a decision on what costs can be reduced, yet still be able to maintain production." While there seems to be no permanent answers to the dilemma of fluctuating milk prices, some say the trend will eventually recover, but others say they're very unsure about the future. One way or the other, prices are low and so are the dairy industries' spirits. |
