Higher costs hit farmers

Although average prices are up, it’s not enough

By Laura Mead
ESCANABA — Local dairy farmers and farmers who run cow-calf operations say they’re paying higher than ever input costs for animal feed, fertilizer and fuel. The market value for dairy and beef isn’t offsetting these costs, local farmers said,

While milk prices are still about $6 higher than the average price (according to USDA reports) between 1995-2008, the price of milk has dropped since its peak last fall.

Audrey Herioux, co-owner of Herioux Farm LLC, a dairy farm in Wells Township, said her recent milk sales have been $16 - $17 per 100 pounds, about $4 less than in 2007. While Herioux said she thinks the price of milk right now is “fair,” she said if it goes much lower, dairy farmers will have difficulty staying afloat because input costs are so much higher.

“If market prices go down, it’s probably going to put some people out of business,” she said. “If you don’t have that cushion of high milk prices they’ll really be hurting because it doesn’t look like fuel and feed prices are going to go down.”

Nancy Porath, Porath Dairy Farm, Bark River, said she and her husband, Alan, have been fortunate to find a good market for their milk.

“We’re doing comfortably with milk prices,” said Nancy. “We’re fortunate enough to get extra premiums because we have higher butter fat protein. We average about $4 more than other dairy farmers.”

Even so, Porath, too, is feeling the higher costs of animal feed and fertilizer, especially.

“It’s costing us probably three times as much to put our crops in the ground,” said Porath.

Don Ives, accountant at Ray’s Feed Mill, Bark River, said the price of corn feed has increased from $120 a ton in September 2007 to $240 a ton. Soybean mill (a protein that gets mixed into animal feed) has risen from roughly $220 up to $390, said Ives.

He said these price mark-ups are mainly a result of fuel costs.

“Fuel prices have affected every sector of the economy from input for farmers to basically selling their product and getting it to market,” he said.

For cow-calf operations, input costs are hitting even harder.

“Our beef farmers are probably having a little bit of trouble,” said Warren Schauer, MSU Extension educator, district farm management and agriculture. “Market prices wont be as strong, and yet they’ve had higher costs.”

Jim Dalgord, Dalgord Farms, Garden Peninsula, said, like Herioux, the prices he’s been getting for his product in recent years have been fair, but won’t be enough to offset the high input costs he’s paying this year.

For raising calves, Dalgord grows most of his own animal feed to save on costs. Still, he has to pay for fertilizing these crops. Due to last year’s drought, he said this year he was forced to purchase some needed animal feed.

With these expenses, Dalgord said he is concerned the market value of beef won’t be enough to keep him in business.

“In the past few years I’ve gotten $1.10 - $1.20 per pound but we can’t stay in business and buy (needed supplies) if that price doesn’t go up,” he said.

The price Dalgord is paid per pound for his calves largely depends on what the buyers are getting paid at the market and what their costs are.

Like dairy farmers, farmers who run cow-calf operations must go through a middle-man before their product reaches the market. Dalgord’s half of the production includes raising the calves to sell to a feed lot where they are “finished” and slaughtered. Buyers take into consideration the cost of animal feed when naming a price. When animal feed and fuel costs are high, Dalgord may get less for his product.

“For the most part I’m a pretty optimistic person, but right now I don’t feel that good about it...just with the high input it scares me,” he said.

John Handel, Handel Farms, Cooks, also runs a cow-calf operation. He admits the market price for beef has gone down a little in the last two years but doesn’t think things look unfavorable for the beef industry.

“The number of calves aren’t growing,” he said. “Because numbers have remained the same in the U.P. the prices haven’t been depressed like they might have been if we had a lot of cows.”

Handel said the key to survival is to plan ahead, pre-buy items and try to lock in prices whenever possible.

To try to predict the agricultural market is difficult, said Schauer, however he believes local farmers can survive the economic pressures.

“The industry as a whole will hopefully be able to weather anything that comes along,” he said.