Shrinking dairy premiums challenge farmers

posted Jan. 29, 2018 8:50 a.m. (CDT)
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by / Brooke Bechen, Regional Editor |

MADISON — The message from board members of Rolling Hills Dairy Cooperative comes through loud and clear: Like many dairy farmers in Wisconsin, the struggles they are facing are very real.

General Manager Larry Hermanson remembers the day when nine to 12 fieldmen were knocking at doors when dairy farms had milk to sell. Now, no one wants to pick it up, he said. There are several causes that factor into the current state of milk production, he explained. Milk prices are low, there is too much milk, farmers are losing markets and the milk premiums are disappearing.

Midwest states lost 27 percent of their milk premium dollars from 2014 until now, Hermanson said, and that does not include the milk sold under Class III. That equals $5.2 million annually being lost — and dairy farmers are certainly feeling that pressure.

“It’s looking pretty rough right now,” he said.

Adding to the absent premiums, dairy farmers are also facing challenges in the areas of rBST, the FARM Program, quality standards, organic, grass-fed and non-GMO.

“We need to start this conversation on the farm side,” Hermanson said. “We’re trying to find a way to fix this with everyone’s help.”

Hermanson and other members of the board of Rolling Hills Dairy Cooperative in southern Wisconsin were the featured guests at 2018’s first Dairy Exchange, held Jan. 23 at the Department of Agriculture, Trade and Consumer Protection building in Madison.

Rolling Hills Cooperative Board PresidentMark Vosberg said that his dairy farm will be about $40,000 short this year because of the decrease in premiums. 

His family farm was planning to hire a full-time employee this year, but will have to put those plans on hold.

“We’re in survival mode now,” he said, tearfully. “I don’t know if I want to farm. It’s hard, people.”

“It’s been a very slow, steady progression in declining premiums,” board member Nate Kliebenstein said. “Class III price was always supposed to be out there to maintain operations.”

The premiums were supposed to help fund other investments around the farm, he added. And if the dairy farmers don’t have money to pay their bills, they won’t be able to produce the top level products that they want.

Kyle Levetzow, another member of the co-op, shared that he just met with his financial team last week to review projections for 2018. He’s “going to be treading water” as he is set to lose $1,000 a day this year — about 10 percent of the equity he and his family have built up on the farm.

“This time around has been difficult because of the erosion of premiums,” he said. “If we don’t want to pay our farmers, we won’t have a local dairy industry.”

He echoed comments made by Hermanson in regards to challenges dairy farmers are facing in the industry, aside from unfavorable milk prices.

“RBST-free, no GMOs, the FARM Program — all these things cost money,” Levetzow said. “We’re seeing a lot of good farmers and businessmen leaving the industry.”

Tom Runde, another member of the co-op, pushed for better ways to promote their product. He said the Wisconsin Milk Marketing Board could be doing a better job with the $2.5 million they get a year from Wisconsin dairy farmers.

“They need to do a better job of using that money to hit the consumer,” he said, especially when a gallon of milk costs about the same as a 12-pack of soda.

“There were 44,000 dairy farmers in Wisconsin when the Milk Marketing Board was formed,” he added. “Now there’s less than that in the United States.”

It affects every town and village we live in, he said.

“It’s time for us to come together and talk about creative solutions so we can get this going in the opposite direction,” Kliebenstein said. “The milk is where it starts. There’s nothing else.”

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