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Tom Marchy of Waterford, Calif., saw disaster looming in the dairy industry last fall. He sold about 1,100 Holsteins and started planting corn. California, the nation’s No. 1 dairy state, has been especially hard-hit by the decline of milk prices from $17 per 100 pounds in January 2008 to $10 per 100 pounds this past March. - TPN

Milk prices leave dairies just a little room to moo

The California Milk Advisory Board continues its "Happy Cows" advertising campaign, but there are few happy dairy farmers right now.

Frustrated with low milk prices, dairy farmers are selling cows for hamburger meat and threatening to dump milk into sewers. Many are burning through their life savings hoping to survive the slump, and others are exiting the business.

Two farmers have killed themselves.

The pain is being felt throughout the U.S. industry, but it's especially keen in California, the nation's No. 1 dairy state. The Golden State's 1,800 dairies produce $7 billion worth of milk annually, more than one-fifth of the nation's supply. Slumping international demand combined with an American public ordering fewer cheese pizzas has turned the milk market sour.

Current prices are about half of what it costs California producers to feed and milk their herds; every carton sold in the supermarket represents a loss on the farm. Farmers are staying afloat by getting loans secured by every cow, tractor and acre they own. But experts say that if milk prices don't rise in the coming months, many farmers will burn through their cash and go out of business.

"This is an unbelievable career wreck. The amount of wealth being destroyed in this industry every week is just mind-boggling," said Geoffrey Vanden Heuvel, who owns dairies in Chino and Corona. "The emotional toll this is taking is just amazing."

Two California dairy farmers killed themselves in the last six months out of despair over finances, according to associates. Farm groups report a jump in stress-related health issues among dairy farmers. "We are getting more phone calls and concerns about suicides than ever," said Michael Rosmann, executive director of AgriWellness Inc., a Harlan, Iowa, nonprofit operating mental-health hotlines for farmers in seven Midwestern states.

Through much of 2008, the average milk price hovered around $17 per 100 pounds — although consumers purchase milk by the gallon, the industry measures by pounds. The bottom fell out of the market when the economy tanked last fall. Prices now hover around $10, according to the California Department of Food and Agriculture. Farmers generally need at least $16, and often more, per 100 pounds to break even, depending on their debt, feed requirements and other factors.

It's good for shoppers. A gallon of milk at Stater Bros. is just $2.02, down 28 percent from $2.79 a year ago. But it has created havoc in dairy land.

"It is a mess. The market just disappeared with the global economic crisis, and unfortunately for dairy producers, they can't simply turn the cows off to reduce the supply of milk," said Michael Marsh, chief executive of Western United Dairymen in Modesto.

Collectively, U.S. farmers need to slash milk production by about 5 percent to bring supplies in balance with current demand, "but we have no good mechanism to do that," Vanden Heuvel said.

The National Family Farm Coalition is calling for more emergency action to protect the nation's 57,000 dairy farmers. The NFFC is one of several farm groups urging Congress and the U.S. Department of Agriculture to set an emergency floor price of $18 per 100 pounds of milk.

Some farmers are thinking of doing the unthinkable — dumping their milk as part of a national protest next week. "If they are not going to allow us to make a living, we will just dump it down the drain," said Arie DeJong, who owns several dairies and 20,000 cows in California and Arizona. "We just can't keep losing money like this."

Luis Bettencourt, an Idaho farmer who owns one of the biggest dairy companies in the nation, is considering dumping two days' worth of milk production — about 8 million pounds.

"Why not?" he said. "We ain't getting any money for it anyway."

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