Why low milk prices are really bad for New York farms

With the price of a gallon of milk dropping to the lowest 10 years might be good for consumers, it has meant New York farmers are making less money than they used to.
And the impact is apparent: New York has 6,000 fewer dairy farms than it had it in 1989. And the number of dairy farms fell 27 percent over the last decade, records show.
The situation is critical for New York’s farming industry: Milk is its number one commodity, and the state is the third largest producer in the nation.
“Things are pretty dire right now,” said Jerry Simonetty, managing partner of Hudson Valley Fresh Dairy in Poughkeepsie. “Every month, local dairy farmers are losing money.”
State officials and farmers point to national and worldwide factors as disrupting New York’s milk and dairy industry.
In 2016, New York farms earned about $568 million — about one third of what it was 2013, according the state Farm Bureau.
The bureau does not expect 2017 numbers to show improvement, and a rebound in 2018 is also not anticipated.
More: Too much milk, too many hurdles for area dairy farmers
NY spends $8B each year on job programs. So where are the jobs?
NY farmers now have a new tax write-off: Food donations
Milk prices dropping
A gallon of milk currently costs about $2.96 nationwide, according to the Bureau of Labor Statistics. In 2008, it was $3.87.
“Six months ago, we thought this year would be challenging, a little sober, but gradually gaining on the milk pricing issue,” said Richard Ball, commissioner of the state Department of Agriculture and Markets.
“But the world supply issue and concerns about NAFTA, etc., we still have an oversupply — and it looks like it’s going to be another challenging year for our dairy industry.”
Around 25 percent of milk exports from the U.S. go to Mexico, Ball said.
The average price paid in 2016 to New York dairy farmers for a hundredweight — which is 100 pounds of milk — was down for the seventh year in a row to $17.25, according to the agriculture department.
Being a «contributor to society» by providing food for people, makes fourth-generation Ontario county dairy farmer Kerry Adams proud of what she does. Tina MacIntyre-Yee
Dairy farms fading
From 2006 to 2016, the number of dairy farmers decreased by about 1,600 — from 5,984 to 4,624, according to the state.
Many of those who have stayed open are trying to find new ways to turn a profit. Some farmers, for example, are selling more grain, corn or hay to supplement their dairy income.
Brent Maynard, co-founder of Ithaca Milk and Finger Lake Farms, said he has tried to address the declining prices by working with multiple, small farms.
“New York farmers are affected greatly,“ said Brent Maynard co-founder of Ithaca Milk and Finger Lake Farms.
“I’m a little different, I combat it by processing my own milk. I work with other farmers who I pay a premium. I pay my guys about $10 more per hundredweight than they receive from the large co-ops. We’re a backstop to low-dairy prices in central New York.»
The yogurt boom
The recent trouble for dairy farms is a stark shift from several years ago when the industry was on the rise because of New York’s yogurt boom.
In 2013, New York surpassed California as producing the most yogurt in the nation, thanks in large part to Chobani producing Greek yogurt in central New York.
The yogurt production growth fueled an increase in milk production: It takes as much as four times as much milk to may Greek yogurt as regular yogurt.
The boom led Gov. Andrew Cuomo to cut regulations to help the industry, but the growth has not been sustained because of the worldwide drop in milk prices.
Also, some upstate factories have foundered, leading to less milk than some producers had expected.
A big Quaker Müller plant in Batavia closed 2½ years after it opened and Kraft sold off a cheese plant in the Southern Tier, which even with a new buyer is not expected to need as much milk.
«Low milk prices remain a real struggle for dairy farmers,” said Steve Ammerman, spokesman for the state Farm Bureau.
“We are in our fourth year of a low-price cycle, and it is indeed causing a lot of stress out in the countryside.”
Too much milk
But the amount of milk produced has created its own problem: There is an overabundance.
There were about 400,000 less total sales of packaged milk products in New York in 2016 than there were in 2006, state figures showed.
During that same time span, though, the amount of milk being produced in New York went up by more than 2 million pounds, or 22 percent more milk over the 10-year period.
One of the problems is apparent: People are simply drinking less milk.
The number of children who said they had not drank milk on a given day doubled between 1978 and 2008 — from 12 percent to 24 percent, according to a U.S. Department of Agriculture study.
According to the Pew Research Center, Americans today are drinking about 42 percent less milk than they did in 1970.
There are more varieties of soft drinks, energy beverages, bottled waters and other milk alternatives, like soy or almond milk, available to consumers than there has been in the past.
The future of milk
Early methods of milk pricing were based on the volume of milk being purchased.
The problem is that various milks have different amounts of fat.
So milk prices now are determined by a number of different factors: the class of milk, the trade value on the Chicago Mercantile Exchange; federal pricing guidelines and dairy agreements under the North America Free Trade Agreement.
Farmers in New York said they are trying wade through all the different circumstances — and trying to stem the tide until milk prices come back.
“In the worst situations, they have to borrow money and go into debt for the year,” Simonetty, of Hudson Valley Fresh Dairy, said.
«The problem with that is they can never pay it back because the prices never get high enough extra income to pay back the debt.
«Some do it, but it’s not a good answer.»
By: Natasha Vaughn, Albany Bureau
Source: Democrat and Chronicle
Link: https://www.democratandchronicle.com/story/news/politics/albany/2018/03/08/why-low-milk-prices-really-bad-new-york-farms/384592002/