DAIRY CRISIS IN USA
Wisconsin lost 10 percent of its dairy farms in 2019
By Jessie HigginsJAN. 8, 2020 


Wisconsin lost 818 dairy farms in 2019, roughly 10 percent of the state's farms. Data showing the number of farms lost across the country will be released later this month. Photo courtesy of Pixabay

EVANSVILLE, Ind., Jan. 8 (UPI) -- More than 800 dairies went out of business in Wisconsin last year, making 2019 among the worst years ever recorded for dairy closures in the state.

"This is a big deal," said Mark Stephenson, the director of dairy policy analysis at the University of Wisconsin-Madison's College of Agricultural Life Sciences. "We lost 10 percent of the dairy farms. We've had some years approach that number, but this is the biggest one on record that I can find."
It's a trend happening across the country, Stephenson added. Waning consumer demand, loss of trade and an oversupply of milk have driven milk prices too low for farms to profit.


America's largest milk producer, Dean Foods, filed for bankruptcy protection in November, citing "a challenging operating environment" and declining "consumer milk consumption." And on Sunday, a second major American dairy company, Bordon Dairy, also filed for bankruptcy protection.

RELATED Milk producer Borden Dairy files for bankruptcy

The U.S. Department of Agriculture has not yet released data on the number of dairies that closed throughout the country last year, but experts expect that -- like the Wisconsin numbers -- they will be high.

For the last five years, milk prices have been too low for the majority farmers to make a profit -- and many could not earn enough to cover their bills.

"There have been multiple farms close around here," said Dan Brick, the owner of Brickstead Dairy, a 1,000-cow farm in Greenleaf, Wis. "There was one that just had an auction last week. It was a 500-cow dairy, and they just closed and auctioned off their cows. People are struggling."

RELATED Milk producer Dean Foods files for bankruptcy

But that trend could be changing.

In the final months of 2019, milk prices rose to 20 cents per pound -- the highest they had been since 2014. As of Tuesday, the price was roughly 17 cents per pound, according to the Chicago Mercantile Exchange -- still higher than the average price during the last five years, which was mostly below 16 per pound.

"It makes it a little easier to get out of bed in the morning when you're making money," said Charles Young, the owner of a 65-cow dairy in Mosinee, Wis.

RELATED U.S. loses 100,000 dairy cows in last year as more dairy farms close

The price is rising now because milk production -- finally -- is decreasing, said Bob Cropp, an emeritus professor of the University of Wisconsin-Madison's Department of Agriculture and Applied Economics.

For the last five years, the dairy industry was producing more milk than the marketed needed. Milk prices in 2014 hit a record high, Cropp said. Dairy farms across the country responded by adding more cows and increasing production.

America's various trade disputes with Mexico, Canada and China -- some of the United States' top milk buyers -- have strained the dairy industry further, Cropp said.

Despite the low prices, production remained high through the first half of 2019. But by fall, the mounting farm closures began slowly slowing production.

Between July 2018 and July 2019, the U.S. dairy herd lost 100,000 cows -- shrinking from 9.4 million animals to 9.3 million. The USDA will release the updated figures on the U.S. cow herd size later this month.

"It took a little while to slow production," Cropp said. "But, we're working our way out of the supply and demand situation."

Experts predict prices will stay elevated during 2020. Many dairies continue to fold, unable to recover from five years of losses, Stephenson said. And those that remain will likely lack the capital to increase production.

"We're very optimistic about it," Brick said. "Prices have rebounded. We're not making a pile of money, but we're in the black again. We're due for a good year."
Borden is latest big milk producer to go bust

BY KATE GIBSON

JANUARY 6, 2020 / 2:19 PM / MONEYWATCH

The glass is looking half empty for big milk companies these days, as Borden Dairy Company becomes the second large producer in recent months to file for Chapter 11 bankruptcy protection. Blame, among several factors, more Americans drinking dairy alternatives made with soy, rice or nuts, industry experts said.

Founded in 1857, the Texas company known for its mascot "Elie the Cow" cited the rising cost of raw milk and market challenges facing the dairy industry as making Borden's level of debt unsustainable, according to a company statement.

America's consumption of cow milk has lagged in recent years amid a surge in popularity of nut-based milks and as retailers offer their own low-cost house brands to bring in more shoppers. Making business even more difficult is the nation's dwindling supply of dairy farmers. That has dented supply and pushed raw-milk costs up nearly 30% over the past year, court papers filed in the case noted.

Dean Foods. the country's biggest milk producer, declared bankruptcy in November and entered into advanced talks with Dairy Farmers of America about a possible sale. Dean's losses also escalated after its No. 1 customer, Walmart, started producing its own milk.

Borden draws a distinction between its situation and Dean's, telling vendors in a notice on its website that it has "solid earnings" while "Dean Foods is not profitable." While Dean intends to sell its assets, Borden said it intends to continue its business "once we fix our balance sheet."

Acquired by private-equity firm Acon Investments in 2017, Borden listed assets and liabilities of between $100 million and $500 million in its Chapter 11 filing. The company has 3,300 people and operates 13 milk processing plants and nearly 100 branches across the U.S., producing nearly 500 million gallons of milk annually.

"This reorganization will strengthen our position for future prosperity," Borden CEO Tony Sarsam stated late Sunday in announcing the move into federal bankruptcy court. "We will continue serving our customers, employees and other stakeholders and operating business as usual throughout this process."

As for Dean Foods' fate, the Dairy Farmers of America said Monday it continues to consider a deal to buy some or all of the company's assets.

First published on January 6, 2020 / 2:19 PM