Low milk prices have dairy farmers killing cows

[October 27, 2009]  DES MOINES, Iowa (AP) -- After burning through $1 million in savings and seeing no end to their losses, dairy farmers Jake and Lori Slegers figured they didn't have much choice -- they had to kill the cows.

So one day last summer their sons tagged all 1,571 cows, loaded them onto trailers at their farm south of Fresno, Calif., and watched them rumble away to a slaughterhouse.

Lori Slegers said her husband came into the house and broke down.

"He said it was the hardest thing he ever had to do," she said. "Luckily, my boys could do it."

Growing demand in developing nations drove up milk prices when times were good, and dairy farmers expanded their herds. But the global recession hurt exports and left farmers with too much milk on their hands. Milk processors cut the price they were willing to pay farmers, in many cases below what it cost to produce milk.

In the past year, hundreds of farmers have come to the same conclusion as the Slegers: The only way to raise prices is to reduce the supply, and that means killing cows. In some cases, whole herds have been turned into hamburger. In others, farmers have kept their best producers and sent the rest to slaughter.

The Slegers turned to an industry-run program called Cooperatives Working Together, or CWT, which pays farmers going out of business to kill -- rather than sell -- their cows and help remaining dairy operations by reducing the milk supply. Until this year, the 6-year-old program had paid for about 275,000 dairy cows to be slaughtered. This year alone, it has paid for more than 225,000 to be killed.

In addition, individual farmers are sending cows to slaughter at a pace of about 55,000 per week, said Robert Cropp, a professor emeritus at the University of Wisconsin. At that rate, about 3 million cows could be killed in a year.

Lifelong dairy farmers Keith Sammon, 55, and his brother, Mark, 53, decided to sell their herd to CWT last summer after considering the low milk prices, the cost of modernizing their operation and some personal health issues.

Keith Sammon recalled the somber mood as he loaded the 80 cows onto livestock trailers one Sunday morning at their farm in Faribault, Minn.

"As we milked the cows ... it was pretty quiet, but then my son came out with my granddaughter, who was 10 months old and she was just beginning to walk around. Just having her around made it easier," Keith Sammon said. "We would load the cows for a while and then go back and play with her for a while. It kind of took your mind off of it."

The slaughter has helped some. Dairy farms pay CWT 10 cents for every hundred pounds of milk they produce. As the cows have been killed, the price processors pay for milk has gone up an average of 66 cents per hundred pounds of milk, said Scott Brown, an assistant research professor for dairy livestock at the University of Missouri-Columbia.

Consumers haven't seen prices go up because processors still pay dairy farmers much less than the retail price, Cropp said. In fact, grocery store prices may still drop some because the milk supply remains much greater than the demand, he said.

That's because even as thousands of cows are killed and many farmers call it quits, others are increasing their herds. In Wisconsin, the nation's second-largest dairy producer after California, the number of cows increased to about 1.25 million in August, up about 5,000 from the year before, according to state figures.

Most of the growth was the result of state tax credits and grants approved a couple of years ago to help the industry modernize and expand. When those credits were approved, the industry was booming.

Also, Wisconsin farmers haven't been hit as hard as those in western states such as California, where farmers must buy more of their feed. High feed, utility and other costs have compounded the losses created by the drop in milk prices.

CWT spokesman Christopher Galen said most of the cows slaughtered in the program have come from western farms.

For the Slegers, the future is cloudy. They are still farming corn, sorghum and winter oats this year but are looking at moving away and starting over. They're not sure what they would do.

"We still don't know if it was the smartest move we ever made," Lori Slegers said. "One day, when the dairy business turns around, will we kick ourselves? We promised we wouldn't do that."

[Associated Press; By MICHAEL J. CRUMB]

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