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Dairy farmers try to 'ride out storm'MENNO, S.D. (AP)--Roger Guthmiller has spent his whole life working with dairy cattle. He's seen prices dip and jump, but he's never seen anything like the current situation that's kept him from breaking even for four months on his dairy farm outside of Menno. Even though the price is finally starting to approach the break-even point, Guthmiller said he's still working hard to keep costs as low as possible. "It's still pretty tenuous,'' Guthmiller said. "I think it's probably the worst we've seen in 40 years.'' Guthmiller isn't the only dairy farmer feeling the sting of low milk prices in South Dakota, a state that has lost 245 dairy farms in the past four years. Gone are the good times of two years ago, when New Zealand and China were eagerly purchasing U.S. milk because of drought conditions and melamine-tainted milk, respectively. Today, American producers find themselves with too much milk and not enough market value. It's a situation that's leading some producers to take extreme actions, including selling dairy cows for slaughter. The Associated Press recently reported that an industry-run program called Cooperatives Working Together--or CWT--has paid dairy farmers going out of business to kill their cows rather than sell them. In 2009, the program has paid for more than 225,000 dairy cows to be killed, almost as many as the 275,000 cows that were paid for and slaughtered between 2001 and 2008 combined. "We've had some of those in here in the state recently,'' said Alvaro Garcia, South Dakota State University Extension dairy specialist. "It was very intense during the last few months in the country, but it has somehow slowed down because of a little bit of improvement in the prices.'' Earlier this year, farmers were receiving about $11 per 100 pounds of milk. The USDA National Agricultural Statistics Service shows the price was up to $12.70 per 100 pounds in September, but that's not enough to break even on most farms, Garcia said. In the past, producers considered $13 per 100 pounds an "ideal price.'' But, while production has stayed up since the recovery of milk production and consumption in other countries, so have input costs, meaning producers now probably need $15 per 100 pounds to break even. "It seems like we are in a sort of new order of milk prices,'' Garcia said. The layman might suggest that dairy farmers get rid of some cows, but it's a suggestion that simply isn't feasible, according to Garcia. "In reality, if you were going to reduce the herd, you might as well think about getting out altogether because you need the money to come in, to be able to pay the bills,'' Garcia said. "If you don't make it with a certain amount of milk, you'll make it even less with less milk.'' 'A lot of milk' The effect of the dairy economy on farms in South Dakota is in the numbers. A USDA report issued earlier this month showed South Dakota's milk production from July through September was 481 million pounds. That is 2 million pounds below the April-June quarter this year, but 5 percent more than last year's production for the same quarter. That higher production is part of the problem, experts say. The number of dairy farms, meanwhile, is falling. As of July 1, 2005, South Dakota had 644 dairy farms. One year later, the number had steadily fallen to 601 and continued its annual drop, showing 530 in 2007, 492 in 2008 and 418 in 2009. Today, the number stands at 399. Even with that lower number of farms, "we've got to stop producing,'' said Darwin Kurtenbach, dairy administrator for the South Dakota Department of Agriculture. "We have a lot of milk.'' The loss of 19 dairies from July to October doesn't seem like positive news, but it may be part of a necessary process to bring stability back to the market. In Kurtenbach's mind, the dairies that can make it through current circumstances unscathed will survive and see demand catch up with supply as the global economy recovers and production decreases due to fewer dairy farmers. "Supply and demand does work in this world,'' Kurtenbach said. "They're going to eventually even out. The whole trick is if you can ride out the storm.'' 'A long struggle' Jim Neugebauer tries not to concentrate on whether or not he's breaking even every month. It depresses him. His goal is just to survive. "We ain't making a whole lot now,'' said Neugebauer, who raises dairy cattle outside of Dimock. "It's still a struggle to get all the bills paid.'' Still, Neugebauer considers himself fortunate that he hasn't had to purchase much outside feed to keep his herd alive. "Overall, there are a lot of dairy farmers that are hurting badly from buying the input cost to feed their cows,'' Neugebauer said. "We've been fortunate this year that we've had a good hay crop and we had enough grain from last year to get us through.'' Without having his own crops to turn to, Neugebauer said it would be much tougher to survive as a dairy farmer. He said a positive attitude is necessary to keep going, and he's eagerly awaiting the day when the demand and the price paid for his milk finally reaches a level where his concerns can be alleviated. "The price is slowly coming up, but it's just going to be a long struggle before we see ends meet again.''
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