Dairy Shortages This Fall/Winter?

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Nichoman's picture
Nichoman
Status: Gold Member (Offline)
Joined: Nov 1 2008
Posts: 420
Dairy Shortages This Fall/Winter?

Some additional information on what's happening to the US dairy industry from an extended, sobering personal conversation I had tonight.  Adding to this earlier post...

http://www.peakprosperity.com/comment/37887#comment-37887

  • Dairy industry is being decimated...nothing in past records of dairying compares to past 6+ months.
  • Loss rate averaging $500 per cow...or roughly 25 percent.
  • Loss rate is increasing almost daily...as feed prices and petroleum prices continue to rise.
  • Dairy Producers are only getting roughly 1/3 of retail costs of milk...questioning why percentage fallen is so low now.
  • Huge operations (UT, TX, CA, ID) probably will fail in a few months without massive infusions of money or over 50% rise in prices.  This is because their loss rate (higher fixed costs) is greater since don't own land to supplement feed versus most Midwest operations.
  • Internal projections of  ~10-20 % reduction in production (9 million cows to be down to 7-8 million by end of year) at this rate.
  • Loss per cow so great even long term rural farmers with no debt and land paid for...having to take out loans to continue.
  • Reviewing the Top Iowa dairy farmer (class guy) his cash flow numbers...show widespread farm operations failures virtually assured this fall unless things change. 
  • Projections of dairy supply losses suggest US dairy exports will end this fall...shortages possible by winter...again unless things change.
  • Government does not yet grasp scope of this gathering Storm.  Clueless was the polite word used. 

Those are main take home points.  Now add increasing food and energy shortages...our debt situation.  Could argue this could be optimistic (or things may become more dire to producers and consumers).

Put this way...got powdered milk...a cow or access to a cow?

FWIW...local insider personal opinion is prices may not only double...but even triple in some markets due to shortages and projected feed and energy costs.  May be permanent reduction in production as producers decimation of equity and debt not sustainable or replaceable...even if credit is available later (we know this highly questionable).

Maybe there are others who can provide more information on this. 

Nichoman

S Schauermann's picture
S Schauermann
Status: Bronze Member (Offline)
Joined: Jan 21 2009
Posts: 34
Re: Dairy Shortages This Fall/Winter?

The New Frontier bank failure in Greeley, CO as reported in a recent Daily Digest was due to defaults in the dairy industry. The repercussions have been felt throughout the N.E. Colorado economy (the fifth largest in the U.S.)

My understanding is that the milk prices dropped roughly 30% from Dec. to Jan., literally overnight. The golden era of easy money and too much caffeine ($4 lattes) fueled an overabundance of expansion and supply.  I believe this to be the common denominator in most industries thus the widespread downturn in the entire economy.

Good thing there is a Jersey, a Holstein and a Brown Swiss in my pasture.

Got Permaculture?

Spencer

suesullivan's picture
suesullivan
Status: Gold Member (Offline)
Joined: Oct 6 2008
Posts: 305
Re: Dairy Shortages This Fall/Winter?

This was the lead story in today's Denver post

http://www.denverpost.com/ci_12506134

More farmers losing hope

Suicide hotlines field calls as prices fall and money woes mount
UPDATED: 06/03/2009 06:16:01 AM MDT

 
 

The phone calls usually come in the evening after the machinery goes silent on farms across the country. The callers speak of dwindling cash flows, crumbling marriages. Some admit they're holding a loaded gun.

Across a wide swath of rural America, increasing numbers of farmers are considering taking their lives.

The nation's largest network of crisis hotlines for agricultural workers reports a spike of 2,000 calls through May compared with the same period last year — a 20 percent increase.

In Colorado, the number of suicides among farmers and ranchers has risen in the past five years: Fourteen took their lives in 2008, twice the number reported by the state's coroners in 2004.

"The increase in calls really started with the change in dairy prices, as they fell last fall," said Mike Rosmann, a clinical psychologist and farmer who heads the Iowa-based Sowing the Seeds of Hope help line serving farmers in seven Midwestern states. "We're starting to see the stress mount. It's a nationwide problem."

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