“Since 2016, 2017, and currently in 2018, it’s been difficult for most producers to cover 100 percent of their cost of production.”
Hank Choate milks 500 cows in mid-Michigan with his family. He says his farm expansion plans have been on hold for the past four years to weather low prices and many farmers are burning equity to stay afloat. “There are so many cows going to market right now and the number of purchasers has diminished so much that the value of the cows are 60% of their worth on a producer’s balance sheet.”
Choate says recently announced processing projects in Michigan will only treat the symptoms rather than the “disease.” “Global production is increasing more than 2.2 to 2.3% at a time when consumption is only increasing 1.7 to 1.8% which is creating a gap of over production.”
He believes until that gap narrows, recovery to be profitable is not very possible.
AUDIO: Interview with Hank Choate
