Michael J. Crumb with the Associated Press is reporting that low milk prices have forced some dairy farmers to take their cows to slaughter houses in order for their farming operations to stay financially afloat.Dairy farmers are not immune from the current global recession. In good times, as the AP reports, farmers expanded their herds because the growing demand for milk in developing nations caused prices to rise. Now, with exports down, farmers have too much milk, and subsequently processors have cut the price they will pay farmers. In many cases the prices are so low that they don’t match the cost of production.
So, over this past year farmers have taken to killing cows—viewing this as the only way to reduce supply and raise prices. As Crumb reports, some farmers have taken to slaughtering whole herds. One program these farmers are turning to is called Cooperative Working Together (CWT), which is an industry run program “which pays farmers going out of business to kill - rather than sell - their cows and help remaining dairy operations by reducing the milk supply. Until this year, the 6-year-old program had paid for about 275,000 dairy cows to be slaughtered. This year alone, it has paid for more than 225,000 to be killed.” At current rates roughly 3 million cows may be killed this year.
Still, even with this development there is more milk available than demand, and so processors continue to pay low prices per hundred weight of milk, which means many farms still can’t pay for the cost of production. This can be attributed to the fact that some farms continue to expand their operations even as their neighbors kill entire herds. Wisconsin is the second-largest dairy producer, behind California, and in Wisconsin the number of dairy cows has increased by 5,000 from a year ago. Some of this growth can be linked to state tax credits and grants that help the industry modernize and expand. This credits and grants became law when times were still good for the dairy industry.
For now, simple truisms of economics are causing many dairy farmers to consider an option that years ago would have been shockingly inconsiderable.
To read the Crumb article for the AP click here.
Posted: 10/30/09
