But not local dairy farmers.
Demand is a good thing, but a glut, not so much, especially when the costs of production are constant and always a concern, two farmers based in Schuylkill County said this week.
“The market is tight. There’s no question about that right now. We’re at the bottom of the market,” Jim Hepler, 63, owner of Hepler Homestead Farms, Pitman, said.
In other words, he said, there’s an excess of milk on the market.
“And some of the reason for that is exports have dropped off. Two years ago, exports accounted for 17 percent of all the milk produced in the United States. Now it’s down to 13,” Helper said.
“The market is down. Prices have been dropping for a bunch of months. Most of that is due to lack of exports, lack of sales. In the Chinese market, they stopped buying whole milk powder. With the dollar being higher, that makes exports more unfavorable. When buyers stop buying, the same amount of milk has been produced. And that creates a glut on the market. And we come under the law of supply and demand. If there’s too much supply, the demand goes down and the price goes down too,” said Kent A. Heffner, 53, one of the managers of Jersey Acres Farms, Wayne Township.
June is National Dairy Month, according to the National Dairy Council. And Schuylkill County is home to more than 20 dairy farms.
Heffner and Hepler talked Tuesday about the challenges their farms have been dealing with in recent times.
The cost of a gallon of whole milk in the United States has fallen to a six-year low, according to the United States Department of Labor Bureau of Labor Statistics.
In June 2011, the average price of a gallon of fresh fortified whole milk in the United States was $3.622. In June 2012, it was $3.396. In June 2013 it was $3.458. In June 2014 it was $3.626. And in June 2015, it was $3.366. In April, the most recent month the bureau has data for, the average price was $3.155, according to the bureau’s website.
With a global surplus and shrinking demand from countries such as China and Russia, milk prices have fallen, according to a February article at www.bloomberg.com.
“America’s dairy farmers are expected to produce 212.4 billion pounds of milk this year, the most in history. Much of it is being sold to cheesemakers who are socking away their output, waiting for demand and prices to rise. The drop in dairy prices this year poses a new test for the industry, which since the 2012 Farm Bill hasn’t had the cushion of U.S. government stockpiling products to support prices,” according to a May 17 article on the website for The Wall Street Journal at www.wsj.com.
The United States Department of Agriculture offers weekly updates on dairy prices at the website for its Agriculture Marketing Service at www.ams.usda.gov.
“The U.S. advertised price for 8 ounce conventional cheese blocks averaged $2.26, up $.02 from last week; 8 ounce shred cheese averaged $2.23, up $.04 from last week. And volume for conventional two pound blocks decreased 25 percent with a weighted average price of $4.87. The U.S. advertised price for 8 ounce organic cheese blocks averaged $4.53, up $.33 from last week. The price spread between organic and conventional half gallon milk is $2.76. The price spread is the difference between national weighted average prices for organic, $4.03, and conventional, $1.27,” according to the “National Retail Report — Dairy” posted on June 3.
Hepler Homestead Farms
Hepler runs the farm with his two sons, Jesse, 39, and Josh, 36.
“We are partners here. We’re a partnership,” Jim Hepler said.
Jim Hepler represents the sixth generation of the Hepler family who ran the farm. His sons represent the seventh.
It’s a 350-acre farm with 100 dairy cows, all Holsteins.
“We just came out of excellent, excellent times. Farmers were hanging onto cows and pushing milk because it was lucrative to sell milk. I mean, things were just moving along. When things get too good, sometimes it takes a crash to align things again,” Jesse Hepler said.
“Well, the costs have dropped too. The last two years have been very good in the dairy business. But all of a sudden, when it comes back to normal, there are a lot of people crying. If times were great all the time, everybody would be in it,” Josh Hepler said.
The farm sells its milk through a cooperative, Dairy Farmers of America, Mechanicsburg.
“It’s the largest cooperative of its kind in the country,” Jim Hepler said.
“They come here every other day and pick up approximately 17,000 pounds,” Jesse Hepler said.
In 2015, it cost the farm $17.84 to produce 100 pounds of milk. At the time, the farm was selling 100 pounds of milk for an average of $19.84, Jim Hepler said.
“There was a margin there,” he said.
In April, the Hepler farm only received $15.40 for 100 pounds of milk. There are 11.62 gallons of milk in 100 pounds of milk.
“And to produce 100 pounds of milk, it cost about the same, that $17 number. So we’re bleeding, hopefully only for a short term. At 8.6 pounds per gallon, our pay for April equated to $1.33 a gallon,” Jim Hepler said.
“That’s what the cooperative paid us per gallon,” Jesse Hepler said.
In recent months, the farm has been spending upwards of $42,000 in operational expenses. And the family is bringing in about $42,000 in income a month, Jim Hepler said.
“We’re pretty well at a wash right now. But we feel we’re at the low point of this pricing cycle right now. I’m hoping we’re at the bottom of this thing. I’m hoping it’s going to improve by fall or winter. But the economists can’t tell us when this is going to change,” he said.
The Heplers try to promote the quality of milk products these days.
“We want consumers to know that milk is a wholesome, quality drink. The quality of the milk they are buying in the store has never been like it is right now. There are excellent tests run on the milk. It is purer than it ever has been in history because of the technology going into producing it and the regulations, the tests and so forth. And I think people should know that a pint of milk contains 16 grams of protein. I think that’s an important thing. Some people are on a protein kick and they’re buying these sports drinks and all this other stuff. And here’s a wholesome, natural product available every day at a very reasonable price and produced locally,” Jim Hepler said.
Jersey Acres
Jersey Acres, a 50-acre farm, has been run by the Heffner family since 1910.
“I’m the fourth generation,” Heffner said.
His farm has 200 milk cows, Jersey cattle.
“That’s how we get our name. If you include the young ones, we have 400,” Heffner said.
It cost the farm “between $16 and $17” to produce 100 pounds of milk.
“It varies. Sometimes it’s hard to know exactly. I use $16.50 when I sit down to do any budgeting. That’s the ballpark with the fluctuations with feed prices,” Heffner said.
Jersey Acres sells its milk to Guers Dairy, Tamaqua.
In April, the farm sold 100 pounds of milk for $19.84, Heffner said.
Census
The most recent statistics regarding milk production in Pennsylvania can be found in the 2012 USDA Census of Agriculture and the National Agriculture Statistics Service.
Pennsylvania’s milk production for 2011 was 10.6 billion pounds, 133 million pounds less than 2010 production. The 2011 average milk production per cow was 19,601 pounds for the year, 246 pounds less than 2010 production of 19,847 pounds per cow, according to the 2012 census.
Pennsylvania held steady at fifth place in the nation’s ranking in milk production, producing 5.4 percent of the nation’s milk. California was first with 21.1 percent of the U.S. production, according to the census.
Source: RepublicanHerald