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Small dairy farmers have hard time keeping up with the big boysOKLAHOMA CITY, Okla. (AP)--Shawn Cusack's last cows arrived at their new home one day in July as he drove to Oklahoma City for a license to sell insurance. Cusack Farms' 80 milk cows are gone. It was too hard for the family farm to keep up with larger dairies. "There's fewer and fewer mom-and-pop groceries and more Wal-Marts. That's just the way the world's going," Cusack said. Before unloading the cows from a trailer in Kingfisher, Todd Mason questioned whether his own 600-cow herd could continue to compete. "I'm 35-years-old, I'm married and got two little girls, and you tend to wonder if you're doing the right thing because everyone keeps getting out," he said. Recent high milk prices at the farm level have turned around the fortunes for Oklahoma dairy farmers who faced a financial crunch after a combination of low prices and a crop-killing drought in 2006. The higher revenue, which could continue because farm prices are expected to stay high in 2007, is too little, too late for some. They are taking advantage of the jump in dairy prices to sell cows for profit and find a new living. Since 2002, when the U.S. Department of Agriculture began tracking licensed dairy herds, more than 100 Oklahoma dairies have shut down. The department recorded 350 licensed herds in 2006. Today, about 300 dairy farms remain, said Noah Litherland, state dairy extension specialist and Oklahoma State University animal science assistant professor. The state loses dairies at about 8 percent per year--twice the national average of 4 percent, he said. "It's not really surprising," Litherland said. "It just happens to be that in Oklahoma we have a lot of small dairies." Dairy size matters. After commercial farms fill up tanks with milk, most pay a dairy cooperative such as Dairy Farmers of America Inc., to pick up the raw product and sell it to a processor. If one farm can fill a semitrailer, it pays a lower cost of hauling per unit of milk than a smaller farm that supplies less. Large dairies, which the USDA lists as having herds with more than 500 cows, represent a third of Oklahoma's inventory. In 1998, when the department first published the percentage inventory numbers, operations with 100 to 199 cows made up the largest slice with 30 percent. Since then, every category below the largest two--200 to 499 and 500 plus--has lost ground. "Whether it's in airlines or hospitals, things tend to consolidate over time," Dairy Farmers of America director of industry research and analysis David Darr said. "Entries and exits occur across the industry, across size, but the general trend is that there are fewer numbers of farms, and that the farms that are left tend to be a little bit bigger in size." The small dairies are disappearing because the baby boom generation is entering retirement and hiring new workers is a cost some farmers may not want, Litherland said. "We see fewer small dairies throughout the U.S. as an overall trend, and that's more or less due to economies of scale," he said. "It's a lot of really hard work. People enjoy it, but may not physically be able to get the cows milked. And, if you've got 40 cows or so, it's difficult to financially justify hiring a hired hand. People can only do so much work. A lot of times, people have really relied on family labor, and we see fewer and fewer young people returning to the dairy." In 2006, hard times hit dairies of all sizes. The "double whammy" of low milk prices and a drought drove Fred Chitwood's 500-cow B&R Farms near Sulphur into debt. Rising cost of fuel, a component of day-to-day dairy operations and hauling fees, also cut into the farm's income. "The dairy business for years has been kind of a roller-coaster business," Chitwood said. "It was just a situation where there wasn't enough money generated by the dairy, so we just basically had to go into debt a little bit each month to pay the bills, and it just got to the point where we decided we'd like to try something else, but find a more stable income." Last year, 100 pounds of raw milk sold for about $13, according to the USDA. Now, the farmer can sell the milk for about $20. Chitwood plans to sell his milk cows in September, now that dairy prices have risen. "The price of the cattle has gone up because other dairymen are looking to get cattle because of the increased milk prices," he said. "They want to get their facilities as full as they can." If a farmer does not want to expand his herd, diversifying his product offerings may alleviate some of the pressure from fluctuating dairy prices. He said he has seen some of his best friends leave the dairy industry recently. One released his herd to Cooperatives Working Together, which is slaughtering cows to prevent price-deluding oversupply. So far, the organization said it has "retired" more than 250,000 cows since the program's first round in 2003. Meanwhile, Morrisland Dairy markets beef cattle and fertilizer besides milking about 60 cows. "If I solely depended on the dairy to make the money, I couldn't make a living at it," Morrisland owner Brett Morris said. "The good thing about the dairy is we've got a constant cash flow. We get a check on the 15th and a check on the 24th of every month." After losing $75,000 in 2006, Mason said the high milk price is great, but it has not been enough to make up for last year's shortfall. "As far as the industry goes, it's just going down the tubes," he said. "There's no more family farms out there. There are fewer and fewer all the time. When guys can't make money, they can't stay in business." As Todd Mason's farm near Kingfisher grows, the former owner of his new cows enters an 8-to-5 life. It's the first time Cusack, now an insurance agent for Triangle Insurance Co. in Enid, has not had a cow to milk, he said. "If they have a problem with the electricity here or the plumbing, it's just not my concern," he said. "I'm not responsible for every aspect of this. I don't have to check generators. I don't have to worry about a lot of stuff, which to me is different. I don't know if it's good or bad. It's not the same job by a long shot." His dairy was not large enough to receive volume discounts, and its profit margin was shrinking, he said. His family could not keep up the farm alone, and he did not want to hire new workers. "We felt like it was a good time to get out, and we did that," he said. "I'm 40 years old, and I felt like it was a chance to start a new career." Date: 10/11/07
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