Drought, high prices pushing dairies to the brink

10/27/2012 7:00 PM
By Associated Press

HUTCHINSON, Kan. (AP) — Two straight years without adequate rainfall have pushed some Kansas dairy farmers to the brink of bankruptcy because of high feed costs and skyrocketing fuel prices.

Orville Miller and his wife, Mary Jane, operate a Hutchinson dairy farm that they hope to keep viable for their son and daughter-in-law, who want to return to the farm.

The couple have 900 acres of crops that are primarily used to feed their cows, but Orville Miller told the Hutchinson News (http://bit.ly/QI17iQ ) this was the second year in a row that instead of harvesting his corn and milo crops, he had to chop them up for silage because they were shriveled.

"When you get up every morning and work all day and know you are going to lose money that day, it does kind of work on your mind and you can't wait for things to change," he said. "For us, we are in survival mode. We are hanging on until things get better."

The National Agricultural Statistics Service said dairy farmers across the U.S. lost 24 cents on every gallon of milk sold in May and June because of the drought and high production costs, including fuel and transportation.

"This drought has really hit them," said Ron Grusenmeyer, director of industry relations for Midwest Dairy Association. "They are losing money every day they produce."

That has caused dairy operators large and small to shut down their farms. Some filed for bankruptcy, while others liquidated their herds and went out of business. Many others are hovering on the brink of insolvency.

The drought has baked crops and pastures used to feed the nation's livestock, causing prices to spike. Corn prices at Kansas elevators have risen more than 80 percent over the past two years, to $8 a bushel. Soybeans went up about 50 percent and milo has shot up 86 percent. Alfalfa hay is both expensive and hard to fine.

Grusenmeyer said the current crisis happened too quickly. Many producers who are working to pay off loans can't get new ones and are struggling to stay afloat.

"Producers go out of business every year whether it is by choice or something else," he said. "But when you have hard times like this, it kind of accelerates it."

The Midwest Dairy Association said the number of dairy farms in the U.S. has fallen from roughly 132,000 in 1992 to 51,000 today.

Grade A dairy farms in Kansas have fallen from 549 a decade ago to 319 now, state dairy commissioner George Blush said. Some of that loss was caused by herd buyouts through Cooperatives Working Together, a producer-funded national program that was trying to help control supply issues.

"We just hope some of these producers can hold on," Blush said.

High production costs are just one problem facing producers. Aflatoxin is another.

The fungus is prevalent in drought-stressed corn, and many central Kansas elevators have reported seeing it in many loads coming across the scales.

Because of the large quantity of grain with aflatoxin this year, the Food and Drug Administration is allowing Kansas elevators to blend that grain with a lower percentage or no aflatoxin to be used as animal feed.

Milk can't contain more than .5 parts per billion of aflatoxin, though, and farmers such as John Yoder in Reno County spent a week in October dumping milk after tests at a milk processing plant showed his product was "hot."

Blush said 16 producers statewide have had to dump milk since Sept. 11 because of a high concentration of aflatoxin, but none currently are disposing of milk.

"I've had worse disasters," he said. "Yet it is hard to keep worker morale up when the milk is being wasted."


Information from: The Hutchinson News, http://www.hutchnews.com

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