Low Milk Prices + Higher Labor Costs + Pricing System = Closing CNY Dairy Farms

Mar 9, 2018

Dairy cattle in Dryden.
Credit Cornell Cooperative Extension / cceonondaga.org

Some Central New York dairy farmers are facing such difficult times that they’re considering leaving the business altogether.  A combination of persistently low prices of milk and rising labor costs are forcing long-time farmers to make some tough decisions.

For Mark Tucker, dairy farming is all he’s known.  He’s been working his family’s fourth generation farm in Skaneateles full time for over 40 years. 

"You spend your life doing this, and now you can't make a profit at it.  It really puts the pressure on someone where they feel like they've been working all their life to have a good income...or a decent income, anyway."

John F. Tucker and Sons has 140 milking cows, with another 80 so-called young stock.  They also grow corn, soybeans, oats, wheat, and alfalfa hay for the cows on their 1,200 acres.  Mark Tucker says it’s just he and his brother, along with a few hired hands.  The other six siblings and his grown children aren’t interested in the long hours and hard work.  So, he says, that doesn’t leave him much of a choice.

"We're definitely feeling the pinch.  I'm getting older.  I'm considering maybe this is the time to exit.  We're getting to the point where we can't pay the bills and it's hard to pay the help."

Tucker says they'd try to boost their production to improve their margins.  But he says there's already too much milk on the market, and they pay a penalty to milk companies for over-producing.    Tucker says the problem is exacerbated by reduced demand and limited exporting opportunities.  

"It started about four years ago.  You usually go in cycles anyway, where you have good years and bad years.  This cycle has been running a bit longer than we've had in the past.  We're really starting to feel the pressure this year."

Tucker says  the shift away from cow’s milk is also due in part to other non-milk products.

"Soy milk should not be called milk; it should be called a juice, since it doesn't come from a mammary animal.  There's almond milk, and they're all taking up more space in the grocery stores where milk used to be."

The 10-year-low in milk prices appears to be rippling through the distribution chain.  Tucker says his primary customer Byrne Dairy is cutting truck driver’s wages in order to reduce their own costs.  


Credit nedairyfoods.org

Consumers are certainly the beneficiary of low milk prices, while the rest of the system that gets it to the table clearly struggles.  The pricing of milk is complicated, but much of it in New York and most other states is controlled by the Federal Milk Market Order System created by farmers in the 1940’s.  Bruce Krupke is Vice president of The Northeast Dairy Foods association in Syracuse, which represents dairy product processors and manufacturers.  He says the system dictates the farmer’s paychecks. 

"The system created by dairy farmers was based on fluid milk consumption.  They get paid more when it's consumed in fluid form rather than cheese, yogurt, or sour cream.  With fluid milk consumption declining,  it just stands to reason the average price to be paid is going to be less."

Fluid milk consumption has declined 42 percent since 1970.  Krupke says it’s a matter of supply and demand that only farmers can manage.

"They control their destiny.  They know the system they're operating under.  It's a good question...why do they continue operating under a system that allows the price to fluctuate as much as it does.  I'm not saying it's a bad system.  I think prices should fluctuate based on supply and demand.  The fact is dairy farmers have continued to produce more milk since the 1950's."          

Krupke says that's due in large part to better technology, more efficiencies, and improved cow breeding.  He says milk exports have increased from about two percent to 15 percent over the last decade, but it’s not enough to offset the glut of milk on the market.  He says it’s not that he doesn’t understand the farmer’s plight. 

"One in particular up north has 70 cows.  He's having a very hard time.  He's considering getting out of dairying.  He needs to increase his herd size to get enough volume to provide enough of a profit to stay in business."