KINDERHOOK -- Eric Ooms remembers the financial “carnage” that hit dairyfarmers when milk prices soured as the recession took hold in 2009. “The price of our milk just collapsed. It was tough for a lot of people.”
Now, the 37-year farmer is getting a breather as prices paid for milk have recovered to an all-time high. But he is hedging his bets, using some of that extra cash to buy a grain dryer so he can sell his excess corn for feed.
“We are diversifying our risks, to be ready for the next downturn,” said Ooms, who with his father and two brothers runs the 400-head dairyfarm with the help of five full-time workers. Thanks to the new dryer, he is swapping some of his excess corn feed for soybeans, something he does not grow.
Milk prices hit an all-time high in the state last year, marking the second year of a recovery from the bottom, according to figures released Tuesday by the U.S. Agriculture Department.
Farmers were paid about $1.78 per gallon, the highest price in U.S. Agriculture Department records dating back to the 1970s. That was up from $1.45 in 2010 and a low of $1.13 in recession-ravaged 2009, when the price plunged nearly 30 percent from the year before.
Farmers last year produced a record 2.1 billion pounds of milk, up about 1 percent from the year before and up almost 5 percent from 2009, federal figures showed.
State Farm Bureau spokesman Matt Nelligan said the state lost about 400 dairyfarmers to the recession in 2009, many more than normal, when in any given year as few as a dozen or as many as 200 farmers shut down.
“We got hit by a perfect storm,” Nelligan said, with the recession and strong milk production driving up supply in the U.S. and in other dairy-producing regions of the world, and driving down prices.
Both Ooms and Nelligan said the profits from the higher milk price do not entirely end up with farmers, as some of that is eaten up by rising prices for fuel, which drives up costs to run farm machinery, and pushes feed and fertilizer prices higher.
“So even the higher prices were not totally as good as it might seem. All the other costs that you pay also went up,” said Ooms, whose family can trace its dairy roots to the 1500s in the Netherlands.
Nelligan said the dairyfarmers in the state and elsewhere in the U.S. are being helped by increasing demand for milk products in Asia, where much of the supply normally comes from New Zealand, which produced less milk because of a sustained drought.
State dairyfarmers are also seeing increased demand for milk used to produce Greek-style yogurt, he said. “We are very excited about it, as it could provide a local demand to help smooth out price swings.”
Both foreign demand and Greek yogurt are helping to make up for a decreasing public appetite for drinking milk that stretches back decades. Americans drink about half as much milk as they did in the 1940s, and after a brief surge in milk consumption in 2009, when prices in the supermarket also tanked, that decline is continuing, according to a report from the University of Wisconsin-Madison.
Some of that undrunk milk is now heading overseas. Dairy exports from the U.S. reached about $450 million in January 2011, about double from the same time year before, the report found.
bnearing@timesunion.com - 518-454-5094 - @Bnearing10
Got milk money?
Here is the gross revenue per gallon and total revenue
2007 - $1.64$2.38 billion
2008 - $1.60$2.38 billion
2009 - $1.13$1.68 billion
2010 - $1.45$2.2 billion
2011 - $1.78$2.7 billion
Source: U.S. Agriculture Department National Agricultural Statistics Service
