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Mountain Home Magazine

Milked

Jun 14, 2018 01:31PM

CHIARAMONTE

There are no other words than the overused “bucolic” and “pastoral” that come close to describing the Davis family farm.

“We view it as a great place to grow kids (they raised five here) and as a way of life,” says Rick Davis.

There is the requisite rambling farmhouse, with welcoming porches outside, and inside a kitchen table big enough to seat a dozen. When the sweet corn is ready, there is a stand in the front yard that works on the honor system—put your money in a box and take your corn home. Over in the well-ordered barn, the cows are friendly and contented. They all have names—Heaven, at age twelve, is the oldest, and she still gets milked every day. The milk house is clean, the barn cats gambol up and down the aisles, and surrounding it all are the greening pastures and fields.

Rick and his wife, Janelle, milk about seventy cows and grow hay and corn on this 600 acres between Keeneyville and Little Marsh. The original farm belonged to Rick’s parents; Rick recalls that in 1982, when he got out of the service and came home to work with his dad, farmers were getting $14.50/cwt (that’s per hundred pounds of liquid milk), and a bushel of seed corn, weighing about fifty-six pounds, was selling for thirty-five dollars. Today, Rick notes, the milk price is not much higher (Penn State Cooperative Extension predicts the Class III price for the first eleven months of the year to average $14.57/cwt). Seed corn is now sold by the unit—a unit of seed corn is about 80,000 kernels, weighs between thirty-four and sixty pounds, and costs an average of $300. These days, he notes, it is “difficult or impossible to save seed.”

“My wife and I have worked hard to be (financially) disciplined but costs don’t go down, they go up,” Rick says. The big, corporate operations can buy wholesale, he states, but he can’t.

No Place to Sell

In early March, Dean Foods, a national milk processor, informed producers in some Pennsylvania counties and in five other states that, as of May 31, the company would no longer be buying their milk. That left dairy farmers in Franklin, Lancaster, and Lebanon counties, among others, scrambling to find outlets. To date, some have and some haven’t. The problem, in part and at the moment, is Walmart. The retail behemoth carries the Dean Foods label but has opted to build its own milk processing facility in Fort Wayne, Indiana. The company says going this route will help them reduce operating costs and enable them to pass savings on to customers.

“The American consumer has never had to pay the true cost of food,” Rick says. “Everybody wants to go to Walmart and wants the cheapest price. We’ve got the necessities and the luxuries all mixed up. What’s good for the individual is not good for the industry.

“We could get more dairies,” he adds, “but there is no place to go with the milk.”

“We [dairy farmers] have done ourselves no service by becoming more efficient,” Janelle says.

The Mailbox Price

It’s called the mailbox price, and it’s the far-from-straightforward way dairy farmers are paid every month. The amount of the check varies somewhat, obviously, with the amount of milk that’s been shipped, but it also varies with such things as milk components, revenue from federal orders, and market and government premiums. Then there are the producer price differentials, the volume premiums, the quality premiums, and the market over-order premiums.

And the thing is, the guy or the gal milking the cows doesn’t know with any certainty from month to month what those variations will amount to.

Or if the check will be large enough to cover what’s owed to the implement dealer, or the seed company (You can save the seed from the genetically modified corn you grew last year, but it won’t produce anything very useable this year, and it may be illegal in some cases to try. It’s a corporate rung on the vertical integration ladder.), the vet, the milk co-op, the hired help, or even yourself. It’s bad enough that a dairy cooperative in upstate New York/New England included a list of suicide hotline numbers along with the milk pricing information it recently mailed to members.

How can you run a business like that? How can you run your life like that?

It ain’t easy.

Facts for Rumination

The first regular shipment of milk by rail was in 1841, between Orange County, New York, and New York City.

A little over 100 years later, in 1944, according to stats compiled by Cornell University, dairy cows in the United States produced 548 gallons of milk per year; in 2017 that amount was 2,429. There were 25.6 million cows in the country then; there were 9.2 million in 2017. Total milk production in 1944 was 14 billion gallons; in 2017 that number was 22 billion gallons.

Fewer cows, more milk.

A recent article from Hoard’s Dairyman, a dairy-focused journal that’s been around since 1885, relates that since 1992, when the number of licensed dairies was first published—there were 131,535 then—the total in this country has fallen by 68.2 percent, with the slowest regional decline in the northeast. Wisconsin, where Hoard’s Dairyman is published, lost the most—21,766 since 1992.

Fewer dairies, more milk.

Also noted in Hoard’s Dairyman: in 2017 dairy farmers got thirty cents for each dollar consumers spent on dairy products. In 2014, considered a banner year by those in the know, that amount peaked at thirty-eight cents for every dollar in consumer spending. Milk checks tanked in 2009, with producers getting just twenty-four cents for each dollar in consumer spending.

Another variable in that monthly mailbox price amount is where the milk goes. Producers whose milk is marketed as fluid milk get the best return—right now about fifty-one cents for every consumer dollar spent. Ice cream requires more processing and non-dairy ingredients than cheese (cheese, by the way, was the star of the dairy show in 2017, with a return of thirty-two cents for each one dollar spent) and offered only a return of nineteen cents per dollar in sales.

Buy High, Sell Low

It was 1960, a presidential election year, and Senator John F. Kennedy was speaking at the National Plowing Contest in Sioux Falls, South Dakota. As a Democrat, he, of course, did not have many positive things to say about his opponent, Richard Nixon, or about the farm policies of his opponent’s party (Mr. Nixon was scheduled to speak the next day, and so would have the opportunity to defend the Republican agriculture programs). But, aside from the politics of the day, it is interesting to realize that what were considered to be problems in the farming community then are still considered problems in the farming community now. One party promises higher incomes for farmers, yet farm incomes decline and costs of production continue to rise. “The farmer’s share of the consumer’s dollar has declined sharply since 1952,” Mr. Kennedy noted. One party disagrees with the other about where best to use food surpluses. There was a need for “a sound system of soil conservation which does not destroy entire farms and which is administered at the local levels by local farmers.”

Increased productivity, while “a source of national power and strength...can be a disaster for the individual farmer.” The “so-called free market...mean[s] disaster for thousands of farmers who are trapped between rising costs and their own inability to control production.” Supply management, anathema to some, was considered by Mr. Kennedy to be essential if there was to be what he called “parity of income,” as there cannot be “both good prices and unlimited production.” He de ned parity of income as that which “gives average producers a return on their invested capital, labor, and management equal to that which similar, or comparable, resources earn in nonfarm employment.” Could there be a balance between supply and demand with as little government interference as possible? He thought it was possible.

And it was here, in this speech, that JFK pronounced what is probably one of the most oft-repeated farming truisms. The farmer, he said, “is the only man in our economy who has to buy everything he buys at retail—sell everything he sells at wholesale—and pay the freight both ways.”

And while he may or may not consider himself to be a Kennedy Democrat, JFK’s sentiment from 1960 rings true for Rick Davis today, fifty-eight years later.

Is Bigger Better or Just More?

Those big dairies—and by big we’re talking 1,000 cows or more—are set up to be operated by fewer people, and often those fewer people are immigrants who are willing to “milk cows for cheap,” in Rick Davis’s words. Those large dairies are under corporate control, and they have economies of scale on their side.

“It’s harder to control a small group of farmers,” Rick says. With a 100-member milk co-op, such as the Middlebury Milk Co-Op, where the Davis family farm sells its milk and where Rick serves on the board, there are 100 different ideas about how things ought to be, but also a willingness to be a little flexible and accommodating to the individual. The Middlebury Co-Op, for instance, “is unique in that it’s willing to go out of its way to haul,” Rick notes, which might mean the difference for a dairy that is very small or off the main route. But in the extremely large-scale operations, whether it’s dairy or hogs or chickens, it’s typically the contractor or the corporate entity who owns the animals, with the management and day-to-day operation of the facility hired out. The feed shows up in a tractor trailer and the product leaves the same way.

Rick adds that there are “guys putting up pig barns and chicken barns,” some locally, in an attempt to diversify their dairy operations and secure an additional income stream, but with the accompanying increase in taxes, debt load, other costs, and market uncertainties, that hoped-for improvement in finances may not materialize. In these cases, it is the property owner, the family, or the individual who went into debt to put up the facility, who takes the financial leap. “We take all the risks and then take the price they’re willing to give us,” Rick says. “You’re just a worker.”

Think about it. It’s been less than a generation, two at the most, since most rural families lived on small farms and kept a few cows, a few sheep, some chickens and pigs. Until the 1850s, according to the American Dairy Association, nearly every American family had its own cow.

It’s not your father’s diversification these days.

Drink More Milk

“Dairy is suffering in the state—everyone knows that,” says Aaron de Long, who serves as the Delaware Valley Hub manager for the Pennsylvania Association for Sustainable Agriculture. “Everyone is trying to figure out how to survive. At PASA we talk a lot about integrating grazing [into a dairy operation], and that can help, even if it’s only ten pounds of dry matter a day. But to access something like a 100 percent grass-fed market, you have to be a really good pasture manager in addition to a good cow manager.” The movement toward grass-fed is strong in dairy right now, Aaron says, and it’s not hard to see why. Feed is one farm input that can be tweaked. Grass-fed is also a label consumers are increasingly interested in purchasing.

Craig Williams, Penn State Cooperative Extension agent for Tioga County, says that 50 percent of a dairy farm’s annual costs are for feeding the cows. Certainly more grass is an option, for those who have the land base, but putting better feed in the silo can help reduce costs, he notes. Extension has detailed charts and graphs and analytical tools that can help farmers figure farm expenses down to the penny per cow.

Aaron says one trend he sees are dairy farmers trying to access direct markets in the same way as, say, vegetable farmers do, either through raw milk or other value-added products.

“But marketing is another job, and that can really stretch a farmer,” he notes. “There are no easy solutions here.”

“We are losing sales to other drinks,” says Craig Williams, citing the increase in non-dairy “milks” in the dairy case. “We need to increase consumption.”

“There is plenty of research that shows whole milk doesn’t make kids fat,” Rick Davis comments. “The industry wants the fat [from whole milk] for cheese and other products.

“Dairy in Tioga County is challenging,” he continues. “This region is set up for small. Cows grazing on hillsides—that’s what we’re best suited for. But there’s the economics. How do you compete with a 5,000-cow dairy?”

What Now?

“Someday we’ll be farming out in the desert,” Rick predicts, then notes as an afterthought, “which we already are. We’re turning the best farmland in the northeast into housing. There is a huge loss of value and respect for our farmland, and we’re going to regret it.”

“We’re so far removed from the family farm of years ago,” he adds.

Well, yes and no. Here in the Davis barn, the morning chores are finished and the family is ready to head to the house for breakfast. Spring was cool and the pastures are just now starting to grow and dry up enough for the cows to be turned out.

“These poor girls are so ready to be outside,” says Laureen Wolgemuth of the patient Holsteins. Laureen is one of Rick and Janelle’s two daughters; she and her husband, Drew, both studied music in college and graduated a few years ago. Drew, a trombonist, laughs a little when he says that trying to get started in a career as a performing musician is kind of like trying to start a dairy. Laureen agrees with her dad that consumer education about farming and dairy is critical to helping families like theirs stay in business. At any rate, they’re back on the farm for a while, saying they “are here to help,” as is Luke, a part-time employee.

“My wife and I are overloaded when we do this alone,” Rick admits.

But, “who wants to manage cows for some contractor?” he muses. “Not me.”