And these days, most dairy owners are likely experiencing sleepless nights as well.
Just like those throughout the country, dairies on the Western Slope are struggling to stay afloat.
 Dairy cows muscle their way for their morning snack. (William Woody / Daily Press File Photo) Advertisement |
Cynthia Haren, CEO of the Western Dairy Association, attributes the struggle to the global recession and sharp falloff of international demand for U.S. dairy products.
"The dairy industry is very dependent on supply and demand," Haren said. "The reason farm-level prices are declining is that supply — milk production — is now outstripping demand."
For the last six years, the international market for U.S. dairy products was high; 11 percent of U.S. dairy product was exported last year, representing over two billion pounds.
"Dairy went from being a national product to a global product," she said.
But after the recession hit the global market early this year, dairy exports plummeted to around 3 percent.
"Now the U.S. is awash in milk," said Hilary Parker, director of strategic communications at WDA. "We are producing at same level, but the international demand isn't there."
Since there is so much extra milk, dairy prices have dropped substantially.
The price of input costs, however, has remained the same.
The price of corn, the essential food for cows, is high thanks to the demand for biofuels such as ethanol. Soybeans and hay are expensive as well.
With the low price of dairy products and the high price to produce them, dairy farmers are losing money on a daily basis.
Haren said the western break-even price per one hundred pounds of milk is $17. Right now, a hundredweight of milk is going for about $10.
She added that during a bad year, western farmers used to lose between $210 and $350 per cow per year. In the first six months of 2009, farmers lost between $500 and $750 per cow per month.
Jim Webb, co-owner of Webb Dairy in Olathe, said he has a break-even price of $18, but his milk only sold for $10.96 this month.
Webb milks about 400 cows three times a day. He loses close to $3 per cow per day.
He added that another challenge lies with lending companies because they have tightened their requirements.
"We need equity to secure loans," Webb said, "but they want to see cash flow, which we don't have."
While Webb is confident that things will turn around, he said Webb Dairy is trying to cut everything possible.
Fortunately, they grow their own silage and field corn, but still have to buy hay and grains, things that cannot be sacrificed because it would hurt production since cows have certain nutrient requirements to produce good milk.
"With vertical integration, you can cut out some of the costs," Webb said.
He also said they have managed to avoid layoffs.
To help avoid severe price changes, Wick books milk on the futures market. Upper Valley Holstein books two-thirds of its milk at a consistent price each year.
"We miss the highs, but we also miss the lows," Wick said.
While most dairy farmers are getting around $10 per hundredweight of milk, Wick gets $14.90. While that is good for him now, if the price of milk went back up to $18 or $19, he would lose money. When prices were high last year, that happened to be the case.
"You have to have enough intestinal fortitude to know you're not going to hit all the highs, but you'll miss the lows," Wick said.
The hard part is deciding when to book milk.
"You just scratch your head and look at the futures market," Wick said. "I'm never smart enough to hit the highs of the market. No one has a crystal ball."
Wick is getting the same price per hundredweight on one-third of his milk as dairymen who do not book their milk on the futures market. His break-even price per hundredweight is between $13.50 and $14.50.
Haren noted that the hard times are not just affecting dairy farmers.
"It's more than difficult; it's more than tough," she said. "It's unprecedented. It's unprecedented for the dairy industry and for families in the U.S. who are recessionary consumers that are trying to make the dollar work 10 times more than they used to."
Still, domestic consumption of dairy is up 1 to 2 percent, which Webb attributed to lower prices at the grocery store.
"Consumers are still realizing that they need dairy in their diets on the nutritional side," Haren said.
Haren is optimistic that things will turn around for dairy farmers and is proud of Colorado farmers for being so innovative and doing what they can to stay afloat.
About a year ago, Webb started making cheese and opened Rocking W Cheese and Milk to level out the highs and lows of the dairy industry. While milk prices per hundredweight are low, he is able to make cheese with extra milk and sell it at his price.
"We can level off some peaks and valleys of price changes," Webb said.
However, he said it is a challenge to start a new business in this market.
Rocking W products can be found in City Market delis on the Western Slope and in King Soopers delis in some of the Front Range stores.
He said they are also trying to find as many other small niche markets as possible, like the Mountain Market in Ridgway and a market in Ouray.
The government recognizes the challenge dairy producers face and is trying to help.
One initiative, the Dairy Export Incentive Program (DEIP), helps increase dairy exports and free the domestic market of excess milk. According to the USDA's Web site, "Under the program, the U.S. Department of Agriculture pays cash to exporters as bonuses, allowing them to sell certain U.S. dairy products at prices lower than the exporter's costs of acquiring them."
Congress enacted DEIP several years ago to get rid of surplus product, Parker said. The tiniest slip in demand could cause prices to plummet, so they spent money developing the export market.
Now, dairy farmers are pushing for DEIP to export more product.
Until the dairy market turns around, Parker said it would continue to be tough on farmers.
"It's been very, very hard on our farmers," she said. "But we know this comes with the territory. This is our family. It's very hard to see them struggling."
cowgirl wrote on Jun 24, 2009 7:11 PM:
Bessie wrote on Jun 23, 2009 8:53 PM:
concerned res wrote on Jun 22, 2009 10:30 AM: