Dairy Industry Suffering From Market Changes

Staff Writer

In small counties like Auglaize, farms aren’t hard to come by. Despite their prevalence and the use of programs like FFA and 4-H, there are many issues that plague aspects of the farm industry that many may not be aware of. This was the topic of discussion at Tuesday’s New Bremen New Knoxville Rotary meeting.
The dairy industry is facing some financial issues at the moment as consumption of dairy products continues to decrease — along with other problems — forcing many dairy farms to consolidate.
According to the United States Department of Agriculture (USDA), in 1970 there were around 650,000 dairy farms in the US. The average size of herds in 1987 was less than 100. In 2017, it was reported by the USDA that there were about 45,000 dairy farms left with herd sizes averaging about 900 cows. FarmAndDairy.com reported in 2018 that in one year, 172 dairy farms in Ohio had stopped milking production, a decline of 7.4 percent.
One local attorney specializes in dairy law while representing large dairy farms across the nation. Ryan Miltner, of Miltner Reed LLC in New Knoxville, has spent his law career focusing on writing policies that establish price formulas and lobbying for dairy farms on a federal level.
“If you’ve ever had the chance to deal with dairy farmers in a business context, you’ll understand from them that they have absolutely no control — very little control — over what they get paid for their milk,” he said. “And in one sense, that is not very different than any farmer … The difference between a dairy farmer and a grain farmer for instance though, is that the ability to hedge your sales is far more limited. You can’t store your product for any extensive amount of time because it’s so extremely perishable.
“The other thing is that the investment for producing milk in so much greater per unit of output than for grain. You’re talking about an animal that, you know, you’ve invested hundreds of millions of dollars in and you can’t turn it off.”
The cost of production compared with the price the milk is sold for is one of the many financial issues the dairy industry in the US is facing. Miltner explained that farmers are paid per 100 pounds of milk purchased. He showed a graph put together by Farm Aid using data from the USDA that showed that despite minor fluctuations, the cost per 100 pounds has remained at about $16 since 2010. The same data set showed since 2010, the cost of producing the dairy was in the $20 to $26 range.
“I don’t care if you’ve got 50 cows or 100 or 500, you can’t make it work long term if it’s costing you more to produce your product than you get when you sell it,” Miltner explained.