Colorado Farm Show: Dairy industry still on the mend
Just how bad was the dairy industry in 2009?
Gary Henrickson, who operates Bella Holsteins east of Platteville, said it has been estimated there was a $1.3 billion loss in income for dairy farmers during the year because of a 50 percent drop in milk prices at the beginning of last year.
“That’s all taxable income,” Henrickson said.
The industry has yet to pull out of the most drastic slump in prices it has ever witnessed, Henrickson said, and he and others don’t think it’s over.
But there is some optimism things might improve in 2010.
“We need a lot of improvement over a long period of time,” Henrickson said, noting the prices have not only damaged the industry in the state, but others who provide inputs to that industry.
He and others at this week’s Colorado Farm Show in Greeley got an update on the proposed Dairy Price Stabilization Program being put forth by the Holstein Association U.S.A., but that’s a program that is getting resistance from some industry insiders. While it is making progress toward reality, there’s a long way to go. That program is designed to narrow the gap between the volatility of low and high milk prices paid to dairy operators and changes the inherent incentives that promote constant production growth, regardless of the market’s ability to absorb that growth.
Les Hardesty, who operates a dairy northwest of Greeley and another south of Windsor, said that plan is one of a handful being proposed, including one by the Dairy Farmers of America, a cooperative whose membership includes most of the 140 dairy farms in Colorado.
“I’m concerned that we don’t ignore exports, because those exports represent a great opportunity for the U.S. industry,” Hardesty said. In 2008, he said, 10.8 percent of dairy products were exported, but that fell by almost 3 percent in 2009. Mexico, he added, is the biggest customer for dairy exports.
The United States, Hardesty said, has a population of about 300 million, which means 95 percent of the customers for U.S. dairy products live outside the country.
“The U.S. industry will always grow. We need to grow 1-2 percent a year to keep up projected increases in population,” he said.
The first half of 2010 will show only slight improvement within the industry, but Hardesty said he sees the second half being better. In northern Colorado, that will be helped by an addition of a new Greeley cheese plant planned by Leprino Foods of Denver. Hardesty said the plant is now projected to come online on a limited basis by the fall of 2011, then slowly ramp up during the next three to four years.
The economy, he added, played a major role in the construction delay of the plant, which was originally set to start operations this year. The plant will be built at the site of the former Western Sugar Cooperative processing plant on 1st Avenue between 16th and 13th streets.
Colorado Commissioner of Agriculture John Stulp said those involved in agriculture remain optimistic despite the problems they face.
“We’re going to get moisture next week and better prices next year,” Stulp said with a laugh.
Turning serious, Stulp, who farms in southeast Colorado, said that while farmers have had good yields on crops the past couple of years, margins have narrowed due to higher input prices in all aspects of agriculture.
The livestock industry, particularly the dairy industry, is starting to see some recovery, although it is slow, and that recovery is also taking its toll on corn producers who supply the main feed ingredient to those livestock operations.
A bright spot was Colorado moving up to No. 2 in the nation in wheat production last year, the first time in history the state has been ranked that high.
“But that also tells you something about wheat production in the nation. Wheat acreage is really down and is now at the lowest its been since 1913. So there is certainly some uneasiness and some concern in a lot of areas,” Stulp said.
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