For Indiana hog and dairy producers, it has already been a long cold winter with financial losses mounting by the day and no relief in sight. A New York dairy farmer, Dean Pierson, facing mounting debt and having no resources to feed his cows, took the drastic action of shooting all 51 of his dairy cows and then turning the gun on himself. This is just a symptom of the desperate situation in which many dairy and pork producers find themselves. Bruce Everhart, with Wells Fargo Bank in Rush County, told HAT that lenders are running out of resources to keep many of these operators in business, “Even if they had good financial resources, the past few months have wrecked their balance sheets.” He said many producers are facing tough decisions on whether to give up livestock production and focus just on row crops. In most cases, he said lenders are requiring more collateral, mainly more land, to continue to extend more credit.
Alan Badger, with First Financial in Vincennes, told HAT there is no short term fix and no sign things are going to get better soon, “It is not just one year, but they have been hit 2 and 3 years in a row.” He says one key to survival is good communication with your banker, “If they are honest with us and we have worked with them for a while, it is in our long term best interest to stay with them.” But for many, a time will come when there is just no more credit to be had and the ultimate decision will have to be made. As one dairy farmer put it, “These are hard times to be a farmer.”
The USDA is forecasting that the number of dairy cowqn will continue to decline in 2010. In the latest ERS report they predicted that ,”The U.S. dairy herd continues a moderate contraction that is likely to continue throughout 2010. Herd size is forecast to average just below 9 million head this year, down from 9.2 million in 2009. Lower expected feed prices should help boost production per cow that is expected to increase by a relatively robust 1.9 percent this year. The milk-feed price ratio is not expected to reach 2.5, a range that typically signals a steady state in dairy cow numbers, until the end of 2010.”
According to the government while the worst of the economic contraction is over, many producers are not in a financial position to consider herd expansion at this time. After a year of culling, the lower average age of the dairy herd should also help boost output per cow, since it is younger, more productive cows that will remain. USDA projects 2010 milk production at 188.4 billion pounds, which would represent a further decline from the 2009 lower production.
Source : Hoosier Ag Today