State dairy farmers get record-high milk prices

Average nearly $15 per hundredweight, but downturn likely

November 29, 2001|By Ted Shelsby | Ted Shelsby,SUN STAFF

Farmers attending today's annual meeting of the Maryland Dairy Industry Association in Westminster should have a little more money in their pockets this year.

"Milk prices are at a record high," said Myron Wilhide, a Carroll County farmer who milks 205 cows and is president of the Maryland Dairy Industry Association.

According to a computer printout, the average price of milk sold at the farm so far this year is nearly $15 per hundredweight. Wilhide's milk payment last month topped $18.50.

"Milk prices have never been that high," he said.

He attributed the recent run-up in milk prices to serious droughts in Australia and New Zealand, which have reduced worldwide milk production. He said outbreaks of foot-and-mouth disease in other parts of the world also contributed to a lower supply of milk this year and stimulated exports of dairy products.

Robert Peters, a professor of milking management at the University of Maryland, College Park, said milk production in the U.S. Midwest also was lower this year.

He said a nearly $500 increase in the price of heifers to $1,600 or $1,800 a cow also has helped push milk prices higher.

The current milk price is up from an average of $13 in recent years and as low as $12.50 three years ago, according to Wilhide.

Prices that low make it hard for most farmers to meet their expenses, let alone bank money for the future. "I've got to have $14 to break even," Wilhide said. "Anything less than that and we eat into equity."

Wilhide's advice to his colleagues: Don't go on a spending spree - there are already signs that the good times won't last much longer.

Wilhide warned that a recent drop in butter and cheese prices on the Mercantile Exchange is a clear signal that milk prices will be dropping again soon.

"It usually takes two months for the butter and cheese prices to work through the cycle," he said. "When it does, I would expect milk prices to drop about $2."

The good times have come too late to help some farms, according to William Zepp, head of the division of milk control for the Maryland health department, which inspects all commercial dairy operations.

Zepp said that 41 dairy farms, 5 percent of the state's total, have gone out of business this year, reducing the number to 748.

Since 1991, his records show, nearly 35 percent of Maryland dairy farmers have quit the business.

While milk prices are good at this time, he said, dairy farmers are still "fighting against economic and regulatory pressures."

"These forces are forcing farmers to get bigger or get out," he said, noting that most of the farms that have gone out of business this year are family farms with fewer than 100 cows.

Zepp blamed part of the decline on the state's nutrient management law approved by the General Assembly after farm runoff was suspected of causing outbreaks of Pfiesteria piscicida in 1997. The outbreaks resulted in the closing of portions of three Maryland waterways, triggered panic over the safety of Maryland seafood and disrupted the state tourism industry.

The law was not limited to highly concentrated poultry farms on the Eastern Shore.

"It applied to dairy farms, too," Zepp said, adding that it creates problems for farmers milking a lot of cows on a small amount of land.

"They have to get rid of their manure, and that can be expensive. There is no state money to haul the manure away," he said.

Real estate development pressures also continue to take a toll on the state's dairy farm.

"Some farmers are selling out," said Jonathan Moore, an official with the Maryland Dairy Industry Association. "They are being offered prices for their land they can't refuse."

For those remaining, it is easier for them to pay their bills today than at any time in recent years.

Despite the anticipated decline in milk prices, Paul S. Weller, executive director of the Maryland Dairy Industry Association, said things are looking up down on the farm. "An efficient producer should be making money at this time," he said.

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