BARSTOW • The low milk prices that are causing many dairies across the country to cut back on their herds or shut down altogether hasn't spared dairymen in Barstow and Hinkley.
During a normal year, Jim Harmsen, owner of Harmsen Family Dairy in Hinkley, would have 1,450 milking cows. He currently has 1,200 milking cows. And Eldert Van Dam, owner of B&E Dairy in Barstow, says he may have to stop production if milk prices keep dropping.
"It's a disaster," Van Dam said. "It won't even pay for the feed."
This year, milk prices have been below the cost of producing milk nationwide, said Rob Vandenhuevel, general manager of Milk Producers Council, a Chino-based non-profit that represents California dairy families. Milk prices have fallen so drastically that the United States Department of Agriculture through its Commodity Credit Corporation — created in 1933 to stabilize, support and protect farm income and prices — will purchase cheddar cheese and non-fat dry milk at prices slightly higher than what they are right now beginning Monday.
Vandenhuevel said the government will buy cheddar cheese at $1.31 per pound, cheese prices are currently $1.13 per pound. Non-fat milk is being purchased by the government at $0.92, he said, about 10 cents more than the current price.
"The secretary has the authority to increase (the price) on an emergency basis," Vandenhuevel said, adding that the inventory of privately owned product is large. "Maybe the (Commodity Credit Corporation) will buy product out of privately held inventory."
Two contributing factors to milk prices in the United States collapsing are the global recession and a supply that outweighs demand, Vandenhuevel said. In 2007 a global milk shortage drove the price of milk higher and dairy farmers in the U.S. responded by increasing production at a rapid rate, he said. All the product in 2007 was sold at home and in China and India. Australia and New Zealand, who usually provides milk to China and India, was going through a drought, so the U.S. stepped in. When the drought ended, China and India no longer needed milk from the U.S., so there was extra.
"From a supply and demand standpoint we as an industry had ramped up production to meet increased demand," Vandenhuevel said. "And it was fine as long as the demand was there. We've suddenly had less demand and you can't just turn the cows off. There's no easy way to scale back. The price collapses."
Van Dam, who has operated B&E Dairy in Barstow since 1989, said he currently milks 2,000 cows. He has 20 employees who have to take care of their families. And now instead of getting $1.60 a gallon for his milk, what farmers were getting in 2007, he's only gets $0.80 a pound. Laying off his employees is out of the question, he said, and he can't just stop milking or feeding his cows.
"This has got to stop," he said.
Every cow at Harmsen's dairy costs him $3.50 a day, and that includes cows that aren't currently producing milk, said Bill Maxsom, a livestock nutritionist who covers an area between Fresno County and southern Arizona. Maxsom was at Harmsen's dairy Friday coming up with a formula of grain and alfalfa that would allow Harmsen's cows to be as efficient as possible, he said. Also, Maxsom said, for each milk cow there are two heifers, and it takes heifers approximately two years to begin to be milk cows.
"We put money into an animal for two years before we can start to see any type of money coming in," he said. "We also carry approximately 12 percent of dry cows, pregnant animals within two months of calving. They have to be fed also."
Harmsen, who has been in the dairy business since 1973, first in Chino and then in Hinkley, said with prices as bad as they are, he's had to cull the animals whose production is at the low end and sell the meat. He also says he's had to lay off workers. Both Maxsom and Harmsen say the milk prices will recover, but Harmsen says he's never seen them this low.
"As long as I've been in business, the highs and lows have been more drastic," he said. "There's no even keel and it seems to be getting worse and worse."
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By the numbers:
Average cost of producing milk: $16 to $18 for every hundred pounds of milk
Current price farmers are receiving: $9 to $10 for every hundred pounds of milk.
Amount farmers are losing a month since January: $100,000
Source: California Department of Food and Agriculture and Rob Vandenhuevel, general manager of Milk Producers Council