KFB Candid Conversations: The state of the dairy industry in KentuckyPosted on Aug 31, 2016
KFB Candid Conversations presents a discussion about the topical issues facing the agricultural industry in a question and answer format with a member of Kentucky’s agricultural community. In this column, issues facing the dairy industry are discussed with Carl Chaney, a longtime dairyman and co-owner of Chaney’s Dairy Barn, a dairy/retail/restaurant operation in Bowling Green, Kentucky.
For those unfamiliar with dairy operations, briefly describe a typical day on the job.
In the past, my day typically began about 4:40 in the morning and I tried to be at the barn ready to bring in the cows by 5:00 a.m. We are a small family farm and we milk about 60 cows so we’re not worried so much about how many cows we can put through the parlor in an hour. That never was a concern of ours; it was always about taking care of the cows. Once we had finished with the milking, we got everything cleaned up; did whatever else needed to be done on the farm or at the farm store until we milked again around 4:00 p.m. and started that process all over again. After we fed the cows and did the cleaning we got finished around 7:00 that evening unless we had a cow calving or crops to put up. About two months ago we put in a robot to milk the cows and we can sleep to about 5:30! Now we are milking three times a day. This investment is working well for us along with a new compost bedded pack barn. We are getting more milk from the cows because they are more comfortable.
Dairy farmers are having a hard time making ends meet due to low milk prices. At those current dairy prices, is there any way to actually make a profit?
The majority of dairy farmers are getting less for their milk right now than what they could have gotten for it 30 years ago. I don’t know of anything that costs less now than it did 30 years ago. While fuel prices have dropped, they’re still higher than in 1986 and feed prices are still relatively high. While all farmers are different, the average cost of production per 100 pounds of milk is around $19. The average price received for that milk is probably around $14-$15 per 100 pounds. You can figure out that math easily and see that for every 100 pounds of milk they are selling; they are losing money. It’s one thing to get up every day and be paid for it but it’s another to get up every day, work hard and you have to pay to work. That’s what a lot of dairy farmers are doing right now. This is why a lot of farmers do other things, like hay, tobacco and grain. We went into the value added side of it where we can sell ice cream and do farm tours.
Haven’t prices traditionally fluctuated according to supply and demand?
Milk prices are cyclical (meaning they rise and fall in cycles according to different economic situations) and they always drop, come back and drop again but it seems like when they drop, they do so for longer periods than when they stay up. If you have an overabundance of a product, you lower the price and you get it moved. But, from the dairyman’s side, when my price drops, it seems like it’s six to eight months before the price in the store drops and I don’t understand that. From what I do understand, milk prices have come down in the store but farmers have been getting lower prices for over a year. But sometimes dairy farmers are their own worst enemies. We continue to get better at production, we feed our cows better we keep them more comfortable and we are producing more milk.
Is diversification the answer to the dairy industry’s problems?
We wanted to do something different with our dairy because there are houses being built all around us. So, we are not going to be able to increase our herd size. But we needed to look at what else we could do to continue a cash flow. We are working toward a sixth generation on the farm and we wanted to make sure we could figure out a way to leave the farm to our children and for them to leave it to their kids. That’s when we decided to make ice cream. We have been doing that for 13 years and in two of those years, had it not been for the store, we would have had to sell the cows because milk prices were so terribly low there was no way to keep a cash flow and keep the farm in operation. In that respect, the ice cream store has saved the dairy. Unfortunately, we’re going through another spell like that.
Does the saying, “Get big or get out” apply to today’s dairy business or is there still a place for smaller family dairy farms?
Larger farms can often absorb some of the cost per cow it takes to operate. There is efficiency in size for some farmers, where if you get bigger some of your cost is spread out. But I’m worried that even those folks are going to be struggling this time. You have to grow if you have three children that were raised on the dairy and someday want to take it over. You can’t feed three families on 100 cows. The problem is, the dairy farmer is getting older and older and many of their children don’t want to come back to the farm. It isn’t easy but it is a way of life that we have been associated with and proud to be that. There’s nothing better than the product we produce and my children were so involved and wanted to keep the dairy going and do anything they needed to do in the years ahead to make sure we have it.
As a dairy producer, what are your thoughts about where you are in the business and what lies ahead?
For our family, having the value added products and the tours are ways we are trying to make a living and we have been very fortunate in that respect. That part of the business has helped us weather some of the problems in the dairy industry. Last year we had over 8,000 students come here so we can show them what agriculture is all about. At the end of the day they go home knowing that milk, ice cream and cheese they get at the store comes from the cows first. This year we will produce 20,000 gallons of ice cream. It has been a blessing for us. But it’s difficult to see some of the dairy farm managers, and we have some fantastic managers out there, struggle right now. Overall, it’s not an easy problem to fix, but I hope we can figure out something in the months and years ahead or many dairy producers will go out of business. They’re doing everything they can to stay because there’s a common thread among the dairy farmers of today. They all love their animals and they love what they’re doing.