Low Milk Prices Are Hurting Dairy Farmers

By Dawn House, The Salt Lake Tribune

Jun. 10–Utah farmers would be better off if they could fill up their gas tanks with a gallon of milk or a bushel of barley.

Nationwide, skyrocketing fuel prices could be a big factor in pushing more farmers and ranchers out of business. While fuel bills keep piling up, dairy farmers are getting nearly the same price for milk they were paid some 25 years ago — adding additional pressure to cash out and sell their land for commercial and housing developments.

“We’ve seen half our dairy farms go out of business in the past 10 years, especially along the Wasatch Front,” said Karen Koncar, CEO for the Utah Dairy Commission. “We have 300 dairies, but the next time we talk, there’ll be even fewer operations than there are today.”

Milk is selling at $2.50 per gallon, and some stores are selling it for even less, as low as $1.50 — in contrast to the $2.91 average for a gallon of regular gas. “Dairy farmers aren’t breaking even,” said Koncar, who grew up on an Ogden dairy farm that is long gone. “We expect the trend to continue [because] farm milk prices are forecast to remain low throughout this year.”

Dairy farmer Ron Gibson’s plan to stay in business is to produce more, which in turn would contribute to driving down prices even more because the nation’s milk supply is already outpacing demand.

Gibson also is being hit with added fuel surcharges for nearly everything he brings onto his Weber County farm, and then for the milk that he trucks out. Because his product is perishable, he’s at the mercy of the marketplace.

“We’re one of the few industries that can’t set prices on our products because we can’t shut off our cows one day and turn them on the next,” said Gibson. “It’s hard.”

Prices for animal feed crops also are depressed. The cost for a bushel of barley is a penny lower than it was five years ago. Worse, a bushel brings in 62 cents less than the cost for a gallon of regular gas.

Gibson no longer grows barley, instead turning to corn and hay. But prices for those crops also have fallen. From 2001 to 2004, a ton of alfalfa hay mixtures fell by nearly $8.

Corn production in Utah has dramatically decreased — the best production year was 1922 — forcing farmers to truck in corn from other areas. Local producers say they are helped when consumers buy more locally produced commodities, many of which bear the “Utah’s Own” label.

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