Published in Food/Agribusiness

Michigan dairy farmer hopes for best as pricing environment improves

BY Sunday, December 22, 2019 09:14am

Dairy producers are struggling to make ends meet, and many dairy farmers have lost money for months or even several years straight. Jem-Lot Dairy’s Stephanie Schafer, who is also a district director with the Michigan Farm Bureau, said the situation is largely the result of low milk prices. Her farm keeps 300 dairy cows in Clinton County. 

It’s been a rough year for farmers. How are they faring going into the next year? 

Believe it or not, farmers are optimistic to the end. I’ll tell you they’re looking forward to 2020. I know a lot of farmers that just wish this year would end. They just want to be out of 2019. It has been tough. They are looking forward to 2020 because it can’t get any worse.

Jem-Lot Dairy’s Stephanie Schafer COURTESY PHOTO

What do you think is getting better? 

I can’t say that I’ve heard a whole lot of grumbling about prices lately. Dairy is starting to look a lot better. The prices are coming up. We’re still dealing with some issues, but the overall price that farmers are getting paid is a lot better than what they’ve seen in dairy. 

Why are the prices so volatile?

That’s a good question and we’ve been asking it. We produce this milk and MMPA (Michigan Milk Producers Association) tells us that their plants are running pretty much at capacity, so why do we have such a low price? They’ll point to several things like fluid milk consumption is down and consumption overall on cheese and everything is down. It’s hard to believe. If we could get exports moving, especially to China, that could be a big game-changer. Those guys are growing and they’re going to have to feed a lot of people.

How much do you think the bankruptcy of Dean Foods is going to affect the regional dairy market next year?

It depends on what DFA (Dairy Farmers of America) does with that and who buys their plants or if those plants just get mothballed. If they just completely close them up, then we’re going to lose processing capacity and that could hurt. I would think it’s going to be over a year before that gets all hammered out and settled — but don’t think that dairy producers aren’t watching to see what happens. You want to have the capacity to process the product. Otherwise, it has to get shipped out of state or to a different processor and then it costs us more money.

Thousands of U.S. dairy farms have closed in the past couple of years and one of the largest drops came from Michigan, which lost 230 dairy farms in 2018, according to the USDA. Do you expect more dairy farmers in the region to close? 

I think you’ll see a few. I’m hoping you don’t see the large number like you have in the last three to four years. When we used to look at the dairy industry, we used to look at it like a three-year curve. One year, you’re going up. In the second year, you’re at the top. In the third year, you’re coming down. Most people on that three-year cycle could survive that up and down, but we’ve been on a (downward trend) for five years already and it’s just been too long. That’s why you see farms going out. The low has been too long for a lot of people to sustain. 

What is happening to the farmers that are leaving the dairy industry? 

They sell the cows, save the equity and save what they can and move on. Some of them are getting to the age, too: I think the average age of a dairy farmer now is 59 or 60 years old. Some of those guys are looking at this as too much of a struggle. They don’t need it and are going to move on and do something else.

What other parts of the industry are they moving on to? 

I see a lot of crop farmers. They have enough acres to make a decent living and it works out great if they have things paid off. I don’t see them going into raising heifers or anything like that because they’ve just had enough of dealing with the animal end of it. 

What are you watching now to gauge your plans for next year and for the future?

We’re watching class three milk. We’ve been watching that to see if we can contract any milk ahead. We are not borrowing any money, I can tell you that. Even though prices are up right now, they’ve been down so long that it’ll take guys a year to a year and a half to catch up. It’s something to get excited about, but it’s not something that’s going to happen instantaneously.

What’s your takeaway as you look ahead to 2020? 

We’re climbing up that hill again. You just don’t want to be one of the statistics. We’re a sixth-generation farm with the seventh generation coming right up. I’ve just come back from the Farm Bureau State Annual Meeting and we listened to some young farmers and they’re enthusiastic. It’s hard not to catch that bug. 

I have never seen a year like this and they may not ever see one like it again in their lifetime, but they have remained enthusiastic through a wet, wet spring and a cooler summer and a wetter fall now, so it’s refreshing to listen to a young farmer. It’s kind of hard not to be optimistic when I also have three young farmers living with me in the house. 

Read 964 times Last modified on Friday, 20 December 2019 08:36
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