Milk industry turns sour

Low milk prices, shrinking industry threaten state dairy farmers' livelihood


Area dairy farmer Matt Lussier pets what he calls his favorite heifer while the rest of the herd stands by. Lussier says he spends a good deal of time interacting with the animals.

ROB C. WITZEL/The Gainesville Sun
Published: Thursday, January 22, 2004 at 6:01 a.m.
Last Modified: Thursday, January 22, 2004 at 1:41 a.m.
HAWTHORNE- Matt Lussier used to dream about his children taking over the family farm. With 500 milking cows, 112 acres and generations of Lussier dairymen for his kids to emulate, the idea seemed a natural one for a successful North Florida farmer.
But that was two years ago.
Since then, milk prices have bottomed out, and the industry Lussier grew up in is in peril. With debts mounting and cash running low, the 38-year-old Vermont native isn't even sure Lussier Dairy Inc. will be around when his son or daughter are ready for the responsibility.
"It's kind of sad," Lussier said Tuesday as he toured the hay fields and milking stalls of his eastern Alachua County farm, north of Hawthorne on U.S. 301. "Once you wipe out the industry, it just doesn't come back."
Fueled by a weak economy and a national milk surplus, record-low milk prices during the past two years have forced farmers like Lussier in Florida - and others across the country - to reconsider their commitment to a struggling dairy industry.
The numbers speak for themselves.
Between 1992 and 2003, milk producers operating in the Sunshine State shrunk from 300 to 190, industry experts say. Nationwide, 119,000 diary farms were operating in the United States 10 years ago; today there are fewer than 75,000.
During some of that time, state milk production remained constant - at about 2 billion pounds annually - as closing farms sold their herds to other dairies.
But during the past six years, the number of dairy cows in the state also has steadily declined, from 160,000 in 1998 to 147,000 in 2003, according to the Florida Department of Agriculture and Consumer Services.
"One of the more alarming things," said Hines Boyd, director of the state's dairy division, "for a number of years, the cow numbers were not declining. But in the past few years they have. The statewide dairy industry has begun to shrink."
Add to that the rising costs of environmental compliance permits for farms, and the perception in many communities that dairies make "bad neighbors," and Boyd says the cards may be stacked against a rebound for Florida's family-run dairy farms.

Dairy industry reeling after 9-11

Many people point to the events of September 2001 as reasons for the drop in milk prices, and the predicament many family dairy operations find themselves in.
"When terrorism hit, people stopped going out and the demand for the product went down," Lussier said. "We continued to produce the product," but people weren't buying it.
The result led to a flooded market, essentially an excess of dairy products such as cheese for pizza or butter for baking, that forced a decline in the price of milk paid to farmers.
In Florida, milk prices in the months following the 2001 terrorist attacks reached a 25-year low, industry experts say, dropping to about $14 per 100 pounds of milk. Before the decline, farmers could expect $18 to $20.
The low prices at market meant "farmers are fighting to stay alive," said Scott Wallin, media relations manager for Dairy Farmers Inc., a Maitland-based marketing group representing the state's dairy farmers.
But there are other reasons for the shrinking dairy industry.
For one, larger farms are consolidating to work more efficiently, buying up the herds of struggling family farms to add to their own, Boyd said. While the average dairy operation runs about 700 cows, a few farms in Florida have more than 1,500, with the largest milking more than 3,000.
Temptation from developers also has played a role, some say, as land for housing projects, parking lots and shopping centers often fetches more money than farming ever could.

Facing the toughest decision

Despite the industry's woes, the 700 cows and heifers at Lussier's farm didn't seem too worried Tuesday. And given the star treatment they receive, there's no reason they should.
Unlike some other farmers who don't have time, Lussier says he often spends quiet moments alone with his younger Jerseys, Holsteins and mixed-breed heifers to help them acclimate to people, a strategy he thinks leads to higher yields and, ultimately, more money.
"A happy cow produces more milk," he said, noting that in the hot summer months, misters and fans help keep the steaming animals cool.
But even a mild-tempered, air-conditioned herd might not be enough to reverse his family farm's fortunes.
"It's my theory (that) 2004 is going to be a fish or cut bait year for the industry," Lussier said. "If things don't turn around by 2005, I'm going to have to take a serious look at other options."
To offset the loss on milk sales, and to pay his never-ending bills, Lussier continues to diversify his operation, selling hay and buying and selling cattle. Ultimately, however, he knows he may have to make the toughest decision of his life.
There are many reasons he hopes that day never comes.
For one, working side by side his with wife, son, daughter and parents is a perk many businessmen never experience. Producing a product that "keeps kids' smiles bright" is also a matter of great pride, he says. Perhaps most importantly, Lussier says he doesn't want to say goodbye to the farm life because he knows that if his land were sold, it would likely be turned into a parking lot, a housing development or worse.
"Once farm land leaves production," he said, his amiable tenor growing serious, "it doesn't come back."

Free trade deal seen as a threat

For now, milk prices appear to have leveled out. According to the latest numbers compiled by the Florida Agricultural Statistics Service, state farmers in December received an average of $18 per 100 pounds, up $3.30 from the previous year and well within the livable range.
"We've come off 21 months of low milk prices, and it was very, very tough on milk farmers," observed Calvin Covington, CEO of Southeast Milk, a regional dairy cooperative that collects milk and negotiates prices for farmers in Florida, Georgia, Alabama and Tennessee.
"But I'm optimistic that 2004 is going to be a much better year," Covington said.
Others, including the National Milk Producers Federation in Arlington, Va., aren't so sure.
In recent weeks, the United States and Australia have been discussing a free trade agreement that would open American markets to Australian farmers in three key areas - sugar, beef and dairy. Australian officials contend the deal could mean an additional $4 billion for that country's farmers.
American farm groups, on the other hand, have begun attacking the agreement to try to thwart a further undercutting of prices from a flood of cheap Australian products.
The dairy industry alone could see a loss of 150,000 milk-related jobs if the agreement were signed, the Milk Producers Federation estimates.
"The threat of economic devastation to rural communities across America as a result of Australian dairy imports is real," federation President and CEO Jerry Kozak said in a statement last week.
"Australia's products would swamp our markets and wipe out thousands of small- and medium-sized family farms in the process."
True or not, the cumulative impacts of low prices and an Australian trade agreement may be more than farmers like Lussier will be able to endure.
"You can't put a money value on farm life," Lussier said as he turned his truck for home after the hour-long farm tour this week. "But you sure can put a stress value on money."
Greg Bruno can be reached at (352) 374-5026 or greg.bruno@gvillesun.com.

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