Milk prices fall after record 2014

West Side dairy producers are once again facing tough times, after milk prices plummeted from all-time highs a year ago.

An industry that saw substantial recovery a year ago is once again facing tough times, with milk prices falling below the average cost of production at the farm level.

Milk prices a year ago were around $22 per hundredweight but have fallen to the neighborhood of $14, according to Annie AcMoody, director of economic analysis for Western United Dairymen. Average production costs may have softened slightly since a fourth-quarter level of just over $20, she said, but are still exceeding the average milk prices.

“Even though 2014 allowed some people to recover from their losses of prior years, for some people it wasn’t enough. I think 2015 has hit people hard,” she stated.

On local dairy farms, the emphasis is on being as efficient as possible to weather the latest downturn.
“It is down pretty substantially,” Moonshine Dairy owner Rich Dyt of Newman said of milk prices. “If we’re lucky, we’re right at a break-even price.”

Grain and forage prices are down significantly from last year, Dyt noted, which has helped offset the impact of the lower milk prices.

Don Gomes, whose family operates Antone Gomes & Son Dairy near Newman, said sound management is critical when milk prices have dipped to the cost of production or below.

“The feed prices have come down quite a bit, which has helped quite a bit. It is not great, but it is doable,” he said of the latest downturn.

He said the dairy has taken steps such as installing a new, larger milk tank so that the daily production can be collected in a single pick-up, thus reducing milk-hauling expenses, and is switching from misters to soakers for greater cow comfort.

“Right now, we are just trying to make sure that we keep the milk production up,” Gomes explained.

Newman dairyman John Toste said he is also looking to cut expenses wherever possible – but without sacrificing milk production in the process.

He said the dairy is culling mid-range producers from its herd that, in times of higher milk prices, would be kept in production.

Toste said he stockpiled some extra feed a year ago when milk prices were high, which has also helped greatly.
“We are using feed that is already paid for,” he stated.

Toste said that, given the feed prices at their current level, he believes most dairy producers would need to see milk prices of $18 a hundredweight for a fair return.

The drought is only adding to the challenges facing dairy producers.

“It is one more thing to deal with,” Toste acknowledged. “We built return systems in all our fields to pick up any drain water, but I might have to buy some pumped water from a neighbor. It is one more thing to deal with.”
“We are in a good water district with CCID, but it is going to be tricky to get by this year on the water we are allotted,” Dyt commented. “We are drilling two new wells as we speak to help supplement the surface water.”
Dairymen who must fallow farmland because they lack water to grow crops are forced to purchase more commodities from outside sources, increasing their production costs.

Despite the latest challenges to face an industry known for its volatile economic cycles, the local dairy producers remain optimistic about what the future holds.

“That is agriculture,” Dyt said. “You have to take the bad with the good. We are hoping that it starts to turn around a little bit this fall. I’m optimistic.”