Dairy farms brace for uncertain futureApril 28, 2020
By ALLEN LAMAN
The cows know no different.
Business continues as usual for the uttered animals. They still graze on farmland pastures in Dubois County, still deliver milk to their farmers, and still putz around, none the wiser that a worldwide pandemic is wreaking havoc on economies and devaluing their product.
The path forward for dairy farms is uncertain and could be lined with challenges for months to come. But at one regional cooperative, milk has not been dumped, and local farmers who comprise it are optimistic they will make it through to brighter days.
“As long as we can get over this hump in the near future, I think there’s gonna be a light at the end of the tunnel,” said Dan Rauscher, co-owner of Rauscher Farms in Huntingburg. “It’s not something that’s going to last forever.”
Craig Lindauer, co-owner of Francis Lindauer and Sons Farm in Ferdinand, explained that milk prices on the commodity market determine the base prices of what they sell. Lindauer said that lower market predictions show a sizable chunk of his farm’s income could soon be wiped away.
“We get paid on our price of milk,” Lindauer said. “That’s direct income.”
Expenses — including the cost of utilities, crop seeds and fertilizer — will remain the same at his farm, he explained, and he added that farms with a previously small profit margin could soon be in the red unless significant cuts are made.
According to the United States Department of Agriculture, under the Federal Milk Order System, milk is separated into four separate classes. Farmers across the country are typically paid through a blend of the class prices, Rauscher said.
He detailed how the price of Class III milk — which is used for cheese and whey — was around $18 per 100 pounds in early 2020. Now, that price is down to $14 and change, and market predictions have it dropping to “$11 or even $10 for some months,” he noted.
Lindauer said predictions suggest prices of milk could be low through the mid- to late summer, and the bounce back will depend on how quickly the economy returns.
“You know it’s coming,” Rauscher said when asked if those forecasts scared him. “It’s not like it’s a surprise. So, you just have to plan for it.”
A livestock, dairy, and poultry outlook document released by the USDA on April 15 tells of how wholesale dairy product prices and milk price forecasts have been lowered substantially since the organization’s March forecast.
“The all-milk price forecast is $14.35 per hundredweight, a reduction of $3.90 from the previous forecast,” the document reads. “Demand for dairy products is expected to be much lower due to the COVID-19 pandemic. Export forecasts have been lowered based on lower expectations for global demand.”
Lindauer milks about 400 cows and Rauscher milks around 220. The small teams of employees at both farms are not in danger of being laid off or having their wages cut, the co-owners said.
Day-to-day operations have remained the same as before coronavirus-related concerns rose, and both believe they are currently in a position to weather the uncertain market conditions through the near future.
“As far as day-to-day work here, it really hasn’t affected us,” Rauscher said. “Financially? Yeah, there’s going to be an impact that lasts for a little while.”
Still, while dairy farms across the country have made headlines for dumping milk, Lindauer and Rauscher are part of a cooperative that hasn’t dumped any thanks to shifts it has made in production and distribution.
Darin Copeland, public relations manager at Prairie Farms — which is based in Edwardsville, Illinois, and runs the operations in Holland — explained that his company has moved volume that is usually shipped to restaurants, schools and other institutions that are now closed to more in-demand areas, like grocery stores.
“That shift has created significant disruptions to the industry as a whole,” Copeland said, “and for Prairie Farms and how we have to do business now moving forward until things normalize.”
Because of its diverse dairy product line and distribution capabilities, the company has been able to use its milk to churn out needed items and prevent pitching.
“Our dairy farmers, our plants, our office workers, our delivery drivers — everyone is working extra hard to manage the distribution piece of this,” Copeland said. “And make sure store shelves remain stocked with high-quality dairy products.”
Approximately 750 farming families from across the Midwest and parts of the South produce milk and ship it to Prairie Farms plants. Even though the cooperative isn’t dumping, Lindauer said that market prices still determine profits, and if the predicted numbers do become reality, “that definitely can kill any hopes for profit for a while, until it gets better.”
While questions abound, both he and Rauscher are approaching the future with a positive attitude.
“I hope I’m right in how I’m looking at this,” Rauscher said. “It’s gonna pass. Just a matter of time, and really trying to cash flow things in the right way to keep the business working like it needs to work until things do recover.”
Lindauer told of how after a four- or five-year slump, dairy farmers were finally starting to experience better milk prices at the end of 2019. Then everything changed.
But farmers are resilient.
“We’re optimistic,” Lindauer said. “Farmers, that’s just their nature. Being optimistic. We’re hopeful that everything is going to straighten out.”
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