They were both terrible years — 2009 and 2012. Is there any way to say one was worse than the other?
It depends on who you talk to. For Jim Ahlem, dairy producer from Hilmar, Calif., 2012 was worse. It’s difficult to compare, he says, because 2009 brought low milk prices and 2012 brought high feed costs. “They both were horrible years,” he acknowledges, but 2012 was “probably a little worse because of the financial weakness people are in.” Certainly, a lot of producers who used up equity in 2009 didn’t have enough time to recover when 2012 came around. “The feed cost is so much higher than it was in 2009,” he adds.
For Ahlem, that is huge. He is able to grow two-thirds of his own corn silage, but everything else (concentrates and hay) must be purchased.
Weather played a role
The success one had in growing feed — influenced by the weather — made a critical difference.
Ken Nobis, who runs a 1,050-cow operation in St. Johns, Mich., was one of the fortunate ones.
“We had very few dairy producers in my organization (Michigan Milk Producers Association) who suffered severely in the drought,” Nobis says. “Most of our producers raise their feed.”
And, timely rains in late July and early August allowed those producers to get the crops they needed. Between July 26 and Aug. 10, many dairy regions in Michigan got 5 to 6 inches of rain, he says. Basically, the areas north of Lansing got enough rain to get adequate, good or even excellent crops.
“I didn’t hear many complaints from our producers that they didn’t produce” the feed they needed, Nobis adds.
Therefore, 2009 was much worse, Nobis says. “The squeeze was a lot tighter.”
It could have gone either way
For Joe Wright, dairy producer from Avon Park, Fla., the squeeze could have been tighter this year than in 2009 if he had not switched from a confinement free-stall operation to a 1,200-cow low-input modified grazing operation.
“If I had continued the way it was before, I don’t know if we’d still be in business,” he said somewhat jokingly, but perhaps with an element of truth to it.
2012 was so much easier than 2009, he adds, because he didn’t have the same feed-cost exposure.
But for other farmers in Florida, 2012 may have proven worse. Many must purchase their concentrates and, as Wright points out, “when you are dealing with soybeans and corn, you probably can’t find a more expensive place.” For one reason, there are many competing uses for the land in Florida, favoring alternatives such as winter vegetables and citrus over corn.
“We definitely have high-priced feed,” says Wright, who serves as president of the Southeast Milk dairy cooperative.
Still some optimism
For Ahlem, the producer from California who believes this year was worse than 2009, there is still an element of optimism.
“For the future, I still feel pretty positive,” he says. He bases that optimism on the progress the dairy industry has made in exporting more of its product overseas, as well as industry recognition of animal-welfare issues and its proactive stance on some of those issues, such as tail-docking. (For more information on exports, see the sidebar above.)
In a bad year, there was one bright spot
Dairy exports are on a record-setting pace.
During the first nine months of this year, dairy exports accounted for 13.6 percent of U.S. milk production (on a milk-solids basis). And the final year-end tally should be close to that figure, says Alan Levitt, vice president of communications at the U.S. Dairy Export Council.
The previous record was 13.3 percent in 2011.
This year’s growth was spurred, in part, by healthy increases in the export of whey protein concentrate and cheese.
Levitt says he is hopeful that the growth will be maintained in 2013. Certainly, the companies that export U.S. dairy products abroad have seen the value of positive growth and have become more sophisticated in meeting the needs of foreign buyers.