Monday, January 02, 2006

On this second day of 2006 it is back to business as usual, although the kids are all still home from school. (This is admirable on the help-in-the-barn-front and excruciating on the sibling rivalry front. If I hear one more word about football, smoke is going to issue forth from both my ears and fireworks are sure to follow.)

I don’t have a lot of positive thoughts about prospects for prosperity in the coming year on the dairy-farming front. A lot of ongoing trends appear to be on the point of converging to make things ugly. One of these situations is the reopening of the Canadian border to mature cattle. As the US has been scrambling frantically to get Japan to readmit American beef in the wake of our two cases of BSE (also called Mad Cow Disease when looking for dramatic effect) they can’t really avoid offering the same deal to Canada without looking stupid and hypocritical. (Not that behavior of that sort has been a problem in the past.) The USDA wants to get it done by midyear and you can bet that they will. However, the free and easy import of Canadian cows is rough for smaller dairy farmers as it facilitates further expansion for the big guys, some of whom import a tractor trailer load of springing heifers every few weeks. This increases the supply of milk and, with that old debbul cause and effect, it also lowers milk prices for everyone.

While the border was closed, small farmers enjoyed both higher milk checks in their mailboxes and a higher price for replacement heifers when they had a couple to sell. (Ironic how the CWT program claimed all the credit for this, when it was really just a coincidence that the program was instituted at about the same time as Posilac was rationed and the border closed, with a side helping of lousy weather nationwide.) Big guys can afford to flood the market with cheap milk, as they get the best deals on hauling and volume premiums and have the benefit of economy of scale. Little guys just get washed away with the extra milk.

Then there is the marketing situation. Milk supply in the USA is controlled almost entirely by a few gigantic food companies. When there is an ample amount available they close their plants to farmers who are not under contract to them. Heck sometimes they close the plants entirely. This leaves smaller, less desirable from their point of view, independent farmers forced to join them or lose a place to sell their milk. This results in lower prices once again, along with the loss of quality premium programs and the need to accept heavy debt in the form of equity. It is hard to stay small in the new world of farming today.

Weather is another not so positive circumstance. For the past decade or so, our summers have been either extremely dry or wet as a tropical rainforest. Heck, last year we had both a summer long drought and the wettest fall in ages. With this going on, fields lose their fertility; it is hard to put up either enough feed or feed of adequate quality to keep the cows producing well. Even purchased feed supplies are short this winter. Expensive too.

Add in increased fuel prices, which raises the price of fertilizer, sky rocketing taxes, hard to find help and an aging farm population, along with ever increasing environmental regulations and a mass exodus from NYC to rural areas and you have a rather frightening aspect for the New Year. Maybe there will be cows at Northview this time next year and maybe there won’t. It depends on how inventive and resilient we can be. Time will tell.

2 comments:

Scott said...

I really enjoy reading your posts, Marianne. Thank you. Happy New Year! And keep up the good work.

threecollie said...

Thanks, Scott, it is the same with your missives. I so look forward to them every week. Happy New Year to you and your family.