cows in field

Low Milk Prices Driving Producers to the Ground

Open Letter

Added May 8, 2012.

March 5, 2012

Horizon Organic threw us a bone last month that will take effect this month, with the addition of a couple dollars per hundredweight. We will start getting help in March, adding to a Market Adjustment Premium (MAP) that will end in the summer, instead of adding about $7.00/cwt to the base price that is badly needed. Probably Horizon wouldn't be able to sell to BJ's Wholesale store enough milk for the same inexpensive price to sell to the retail customer for $2.50 to $2.99/half gallon.

There are signs in several super markets in my area on the dairy case that say 'Due to shortage of organic milk, we run out every week because we didn't receive what we ordered, but that it will be straightened out by June'. The real reason they are running out is because the milk companies have paid less than the cost of production for several years and the Northeast is getting over a million pounds of milk per month less month after month, even though the dairy processors are signing up new farmers all the time. Boy, have the new farmers got an education coming. Part of the reason milk is down, is when you can't pay all of your bills at the end of the month, dairy cows go to beef. Because of this, cows that are slow breeders die to pay farmers' bills. Farmers are also running out of minerals and grain on occasion because they can't come up with money enough to pay the grain bill. By the way, a lot of grain is green instead of golden because it is alfalfa meal, which is 17% protein. If your grain is green and smells like hay, it is alfalfa and not corn and soybean meal, because of this, cows give less milk. However, alfalfa costs $300/ton instead of $1000/ton, but the energy is 65 therms instead of 100 and the cow tells the farmer that difference in the milk tank. The farmer may be fooled but the cow is not.

March 20, 2012

Attention Horizon Management:

You are driving your 'Producer Partners' into the ground deeper than they have ever been. When you don't buy grain for animals, including the milking herd sometimes, because you don't have money enough to pay the old grain bill, and you can't replace machinery that desperately needs to be replaced. This is going to affect feed quality, because old dead machinery breaks down when you need it.

You used to be industry leaders; now you have to be bought along dragging and kicking. This has been going on long enough so that your 'producer partners' are in the most distress
they have ever been.

You finally threw us a temporary bone after every one else had and many of your shippers (producers) were talking with Organic Valley about changing. $2.00/cwt is an insult when you have a $6.00-$8.00 shortage just to survive and the increase needs to be on the base price, not a bandaid. There are approximately 50 organic dairy farmers left in Maine and at one time there were 70. If you would straighten up, there could be 100 farms. However, you would have to make a commitment to allowing the farms to make a profit.

I feel comfortable saying you folks probably have hospitalization insurance. Most of your shippers don't because they think more of their animals than of themselves and the few that do have a deductible of $5,000 - $10,000 so they use their limited money to pay the light bill. The joke, however, is on the shippers because you added the $2.00, but you took away the $3.00, so we lost $1.00.

Maybe you even had a vacation with pay; I hope it was enjoyable. The farmer hasn't had the finances to get away for years because of negative income. It may be time the 'producer partners' took their problems to the consumer. I suspect they would be interested to know that we haven't had a 'break-even' price in several years and have been existing on the family woodlot and whatever they can pick up for outside work by family members and old depreciation.

I suspect if you went and looked at the cattle that your 'producer partners' are keeping you would find a lot of shamefully thin animals with no bedding to lie on and dung balls a-plenty.
In closing, I can get along nicely without a monthly newsletter, just send the money. And, if this letter hits a nerve, you might start paying a fair price. Grain is up by several hundred percent since you changed the base price and fuel has doubled.

And, if this aggravates you a lot, just send me a 30-day notice that you will do nicely without me and I will go away. If you take this offer, thank you in advance, because I have been trying to make this choice for several years.

Informal Survey of Horizon Producers Reveals Economic Pain

Ralph Caldwell (organic dairy producer in Turner, Maine) made up a questionnaire that was passed out to Horizon Shippers (about 20 of them) at the Horizon annual meeting in Maine this past spring. Ninety percent of the farmers answered the questions on the questionnaire, and 81% responded to the questions in the following way:

  1. Does someone in your family work off-farm to buy the groceries and clothes and get health insurance? YES
  2. Do your family members and employees have health insurance with less than a $2500
    deductible? NO
  3. Did you cull more cows than usual in the last 24 months or sell more heifers to pay bills? YES
  4. Do you have more milking age cows now than 2 years ago? NO
  5. Did your family take 7 days or more vacation last year? NO
  6. Do you have more debt and more over-30-day bills than 2 years ago? YES
  7. Have you borrowed money or put bills on a credit in the last year because your milk check didn't cover necessary expenses such as grain, fuel, taxes, electricity, and groceries? YES
  8. Do you seed down at least 10% of your farm each year to grow quality feed? NO

Ralph Caldwell
Caldwell Farms
Turner, Maine

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