America’s dairy farms are disappearing, by 95% because the Nineteen Seventies – milk price regulations are one reason for this

Milton Orr looked out over the hills of northeast Tennessee. “I remember when we had over 1,000 dairy farms in this county. Now there are fewer than 40,” Orr, an agricultural consultant for Greene County, Tennessee, told me with a touch of sadness.

That was six years ago. Today, there are only 14 dairy farms in Greene County, and only 125 in all of Tennessee. Across the country, the dairy industry is experiencing the identical trend: in 1970, over 648,000 US dairy farms milk cattleUntil 2022 only 24,470 dairy farms were in operation.

While the variety of dairy farms has declined, the typical herd size – the variety of cows per farm – has increased. greater than 60% of the entire milk production takes place on farms with greater than 2,500 cows.

This massive consolidation within the dairy industry is impacting rural communities and making it harder for consumers to know where their food comes from and the way it’s produced.

As a milk specialist At the University of Tennessee, I'm consistently asked, “Why do dairies go bankrupt?” Well, like the connection status of our friends on Facebook, it's complicated.

The problem with pricing

The biggest complication is how dairy farmers are paid for the products they produce.

In 1937, the Federal Milk Marketing Orders (FMMO) were introduced as a part of the Law on agricultural marketing agreementsThe purpose of those regulations was to set a monthly uniform minimum price for milk based on end use and to be sure that farmers were paid accurately and on time.

The farmers were paid on the premise of how the harvested milk was usedand that's the way it still works today.

Will or not it’s bottle milk? That is Price Class 1. Yoghurt? Price Class 2. Cheddar cheese? Price Class 3. Butter or dried milk powder? Class 4Traditionally, Class 1 receives the best prize.

There are 11 FMMOs that divide the country. The FMMOs in Florida, the Southeast, and Appalachia focus heavily on Class 1 or bottled milk. The other FMMOs, just like the Midwest and Pacific Northwest, have more industrial products like cheese and butter.

In recent many years, farmers generally received the minimum price. Improvements in milk quality, milk production, transportation, refrigeration and processing resulted in larger milk volumes, longer shelf life and greater access to products throughout the United States. Growing supply reduced competition amongst processors and lowered overall prices.

Along with these improvements in production got here increased production costsreminiscent of livestock feed, farm staff, veterinary care, fuel and equipment costs.

Researchers on the University of Tennessee in 2022 compared the worth for milk in all regions against the first costs of production: feed and labor. The results show why farms are having problems.

From 2005 to 2020, milk sales revenue per 100 kilos of milk produced ranged from $11.54 to $29.80, with a median price of $18.57. During the identical period, total costs to provide 100 kilos of milk ranged from $11.27 to $43.88, with a median price of $25.80.

This meant that a single cow producing 24,000 kilos of milk earned a median of about $4,457. However, it cost $6,192 to provide that milk, which represented a loss for the dairy farmer.

More efficient farms can reduce their production costs by improving cow health, reproductive performance and Feed-milk conversion ratios. Larger farms or groups of farmers – cooperatives reminiscent of Dairy Farmers of America – can also give you the option to cash in on futures contracts on grains and future milk prices. Investments in precision technologies reminiscent of robotic milking systems, rotary milking machines and wearable health and reproductive technologies might help reduce labor costs on farms.

Regardless of size, surviving within the dairy industry requires passion, dedication and careful management.

Some regions have suffered greater losses than others, largely as a consequence of how farmers are paid, which classes of milk they work with, and the rising production costs of their region. There are some insurance and protection programs that might help farmers offset high production costs or unexpected price drops. If farmers use them, they will, in line with data, acts as a security netbut they don’t solve the underlying problem that costs exceed revenues.

Passing the torch to future farmers

Why do some dairy farmers proceed to carry out despite low milk prices and high production costs?

For many farmers, the explanation is since it is a family business and a part of their tradition. 97 percent of dairy farms within the United States are family owned and operated.

Some have grew as much as surviveFor many others, the transition to the subsequent generation represents a significant hurdle.

The average age of all farmers within the Agricultural Census 2022 was 58.1. Only 9% were considered “young farmers”, i.e. aged 34 or younger. These trends are also reflected within the dairy industry. However, only 53% of all producers stated that they were actively involved in estate or succession planning, i.e. that they’d at the very least found a successor.

How to assist dairy farms change into success stories

In theory, buying more dairy products would increase the market value of those products and affect the worth that producers receive for his or her milk. Society has actually done that. Milk consumption has never been higher. But the best way people devour dairy products has modified.

Americans eat so much, and I mean so much, of cheese. We also devour loads of ice cream, yogurt, and butter, but not as much milk as we once did.

Does this mean the US should change its milk prices? Maybe.

The FMMO is currently being reformedwhich could help curb the exit of dairy farmers. Reform focuses on The ability of recent cows to provide more fat and protein can be higher taken into consideration; the fee support processors receive for cheese, butter, skim milk powder and whey powder can be updated; and the Class 1 rating can be updated, amongst other changes. In theory, these changes would bring milk prices nationwide in keeping with production costs.

The U.S. Department of Agriculture also supports 4 dairy Business innovation Initiatives To help dairy farmers maintain their operations for future generations through grants, research support and technical assistance.

Another technique to support the local dairy industry is to purchase directly from the farmer. Added value or the variety of on-farm dairy farms that produce milk and products reminiscent of cheese and sell it on to customers is increasing. However, these farms include financial risks for the farmer. The responsibility of milking, processing and marketing the milk adds two more jobs to the already large task of milk production. And customers have to be financially in a position to pay the next price for the product and be willing to travel there to buy it.