Good grain harvest helps dairy farmers weather 2017
WAYNESBORO -- A bumper crop of corn and soybeans this year is expected to help local dairy farmers survive a prolonged period of low milk prices.
“Any grain sales are subsidizing us so we can get back to zero,” said Jack Martin, a Waynesboro area dairyman. “If you have any to sell, it’s a help. It’s been a long time since we’ve been making any money. You have to figure out how you make it through.”
Milk prices are forecast to be lower through the first 10 months of 2018 than they were in 2017, according to the most recent Dairy Outlook from Penn State Extension. The average predicted milk price is about 4 percent lower than what a dairy needs to keep cash flowing.
Dairy Outlook authors are Timothy Beck, Virginia A. Ishler, David L. Swartz and Robert C. Goodling, all Penn State’ dairy extension personnel.
The nation’s farm debt has risen nearly 20 percent in four years, according to the U.S. Department of Agriculture. Net farm income is less than half of what it was in 2013, although it rose a minimal 3 percent in the past year.
“Eventually, if commodity prices do not rise, debt levels can’t continue to rise because there will not be the cash flow to service the increased debt,” according the December PSU Dairy Outlook.
Franklin County is among Pennsylvania’s top agricultural counties. It ranks No. 2 behind Lancaster County in milk production and number of cows. A quarter of Franklin County’s farms are dairy farms, and their production, worth nearly $900 million, accounts for half the farm receipts in the county.
Operating margins have been slim.
“It seems we are living through a watershed moment in our state’s industry,” according to the Dairy Outlook authors. “The potential for significant restructuring of our state’s industry seems great.”
Dairies that have survived the low margins of 2015 and 2016 are dividing into two groups – those controlling costs and those that have burned through their equity and that lenders see as credit risks, according to Dairy Outlook. Farms that have ruthlessly controlled costs are seeing opportunities for expansion.
Milk supply exceeds demand. The USDA's most recent dairy forecast predicts more cows, more milk production per cow and a 2 percent increase in U.S. milk production in 2018.
The last of the local feedstocks are off the fields. Pennsylvania’s corn and soybean harvest is comparable to that of 2013, according to the U.S. Department of Agriculture. About 90 percent of Pennsylvania growers reported good to excellent crops.
“In this area, corn yields have been good to very good,” said John Rowehl, agronomy educator for the Penn State Cooperative in York County. “Farmers I’ve spoken with are saying it is not the record-breaking year they had a couple years ago, but well above average. As always there are some areas that missed some rain and didn’t do as well.”
Martin said he sold some of his corn on contract in August.
Every now and then he thinks about throwing in the towel on dairy and turning to beef cattle.
“It crosses your mind,” he said. “My son loves Holstein cows, so I guess I’m in for the long haul. We’re in this for the long haul, so I guess we’ll keep at it.”
Jim Hook, 717-262-4759