March, farming & the Weather

Shannon Bohrer

(3/2020) Spring is just around the corner. This is the time of year to think about our summer gardens while farmers are planning for spring crops. We think of spring as the season of rejuvenation, the awaking from our long winter. At least that was the normal progression, but things have changed, and some of the changes have not been good for farmers.

My wife and I built our farm 43 years ago, in 1977. The road we live on was gravel back then and there were six dairy farms within a mile of our farm. The dairy farms slowly went out of business and today there is only one left. A few of the farms are still in operation, making hay and other crops, as well as raising beef. But the future of farming, the traditional practices and general viability of farming, which we think of, are in question.

Several years ago I had brief conversations with two local dairy farmers. One farmer had reduced his heard and was only milking 30 cows, and when I asked why, he responded that he was losing too much money. The price he was getting for his milk was less than the cost of producing it. I responded with "why not just sell all of the cows?" He answered that if he sold the cows, he would actually lose more money. He had run all of the numbers and he would lose less money if he continued to milk, so he continued.

"The farmer has to be an optimist or he wouldn't still be a farmer." - Will Rogers

I was visiting another farm for an agricultural event, when I ran into the other farmer who was still milking. After exchanging pleasantries, I asked how much longer he planned to milk cows. He responded that he would continue until, he ran out of savings. Since he was already of retirement age, I remember thinking; I hope he has significant savings. He is the only farmer still milking in our area.

Farming is just not in trouble in Frederick County, it is struggling everywhere. In 2019, the state of Wisconsin, the dairy state, lost 818 dairy farms, many of them being bankruptcies. While Wisconsin is a large state, the loss represents 10 percent of the dairy herd. When the price of milk is lower than the cost it takes to produce it, it’s difficult to stay in business. Milk prices have risen lately, but too late for many farmers. Dairy farmers have a twofold problem. First, the farmers that still exist are extremely efficient; producing more milk with fewer cows while the demand for milk has decreased. The second issue is related to the lack of demand. More consumers are drinking milk like products, like almond, coconut, rice, soy and whatever else sounds exotic.

With low milk prices, farming bankruptcies are at record numbers. Related to the bankruptcies there has been an increase in farmer suicides. Farmers currently have the highest suicide rate of any occupation. The rate is "Five times that of the rest of the U.S. Population." Traditionally we are told that if one works hard you can make a good living. Imagine working 70, 80 or 90 hours a week and being very productive, but then having to declare bankruptcy.

The enormity of the problem is evident when very large milk sellers, like Borden Dairy Co., home of "Elsie the Cow" filed for Bankruptcy. Borden had been the second largest milk producer in the country. The largest, Dean Foods, filed for bankruptcy in November, just last year. The company said that they have been negatively affected by the dairy alternatives (milk not from cows) and also retailers investing in their own dairy products.

South Mountain Creamery, a successful Frederick County dairy, is an example of a farm investing in its own product. Apparently, if you can produce, process, market and sell your own product, you can profit. However, another issue related to the bankruptcy of Dean Foods, was that Walmart opened its own milk processing facilities in 2017, causing Dean Foods to cancel over 100 dairy farmer contracts in eight states. So, what happens when small farms that produce, market and sell their own product, have to compete with the "Marts" in our world?

As dairy farmers stop milking, many have changed from producing milk to raising livestock and growing other products, like corn and hay. The prices for these other products have also taken a tumble. In 1981 we were selling our corn for $3.50 a bushel and the breakeven price was $2.25 a bushel, so we were making some money. Currently the price is around $3.80 a bushel, so it has gone up 30 cents in 39 years. The price has been higher, but it has also been lower. The current estimated breakeven price for corn is currently $4.00 per bushel. Obviously the total cost and yield per-acre is important, but the weather is an addition element that the farmer cannot control. The spring rains that flooded western and southern states last year are becoming normal weather patterns, not unlike the fires in California and Australia. Switching from milking to row crops has been difficult for many small farmers and the changing weather patterns are just another obstacle.

The beef industry has also had problems. Two transnational corporations butcher and pack over 80 percent of all the beef raised in the U. S. In 1970, beef ranchers received about 70 percent of what consumers paid for their product. Today, the rancher receives about 40 percent. Since 2016, "the small rancher profit margins have fallen nearly 30 percent… while packers’ profits have jumped 68 percent."

Falling revenues with milk, row crops and livestock prices have partially contributed to the farmers’ problems. I say partially, because our U.S. agricultural trades deals, which have been almost, none-exist, along with our new weather patterns; i.e. floods and droughts, have significantly contributed to the farmers problems. Because of the lack of trade deals, the U.S. world market share for agricultural products has declined. The Trans Pacific Partnership (TPP) trade deal that was cancelled, was supposed to boost our agriculture products. Of course, the cancelled deal was good for China. Experts have predicted and believe that much of the lost market share - will never return.

Not all of the farming and agriculture news is bad. Some farmers, usually very large ones, are selling their farms to Saudi Arabia, and other foreign countries. Saudi Arabia grows alfalfa hay in California and Arizona for shipment back to its domestic dairy herds. "In another real-life example of the world's interconnected economy, the Saudis increasingly look to produce animal feed overseas in order to save water in their own territory, most of which is desert."

Recently, a Saudi company, Almari, purchased 10,000 acres for $32 million. The land is just 50 miles from Vicksburg Arizona, along the Colorado River. So, if you have a small family farm, of 10,000 acres, you can sell your farm and retire in comfort.

"Farming looks mighty easy when your plow is a pencil
and you're a thousand miles from the corn field"
- Dwight D. Eisenhower