As his 100 dairy cows lumbered over for their Monday afternoon milking, farmer Eric Foster pondered his sudden misfortune. Those Holsteins and Jerseys, profit machines during a recent milk boom, are now such money losers that he has begun selling part of his herd and fears he might have to quit the business altogether.
It is not the cows' fault. The problem is the plummeting wholesale price of milk. It has fallen more than 40 percent in six months, driven down by disparate factors such as better rains in Australia, a tainted-milk scare in China and the global economic slowdown.
This unlikely combination of forces has hit Foster's milking parlor in Easton, and dairy operators across Maryland, with a vengeance. After soaring in 2007 and remaining high much of last year, milk prices paid to farmers have collapsed and are expected to remain dismal, even as feed and fuel stay fairly expensive.
Some dairy farmers have shut down. Others, like Foster, are trying to hang on. He is hoping a federal subsidy will help him endure thousands of dollars in monthly losses until the market turns.
"It's a disaster," said Foster, who is 39 and began the dairy five years ago with his wife, Holly. "We're going to do the best we can to survive. If you come back in six months and prices haven't changed, I don't believe we're going to be in the dairy business."
Though consumers should benefit from somewhat lower prices at the supermarket, the drop in the value of milk presents a grim outlook for dairy farmers from here to California.
"We project one of the lowest milk prices in 2009, one of the lowest in decades," said Larry Salathe, senior economist at the U.S. Department of Agriculture in Washington. "Right now, our thinking is pretty bleak. ... This has been a very sharp and sudden decline that no one anticipated. Dairy producers are very much concerned, and we're concerned, too."
Farmers are accustomed to price swings, but experts say this one has been wilder than most. Given the low-price forecast over the coming months, Maryland agriculture officials predict further contraction in a state dairy industry that has been shrinking for years.
"We're going to see an acceleration of dairies going out of business," said Patrick McMillan, assistant secretary of agriculture.
