While the national economy seems to be on the road to recovery, dairy farmers in California are still on the decline.
According to milk-production data released by the California Department of Food and Agriculture, the state's dairy farms lost $882 million in 2012. To put the numbers in perspective, a 1,000-cow dairy with an average per-cow annual production of 23,457 pounds lost around $310,200 for the year.
Along with the monumental loss in direct profit, over 100 of California's 1,675 dairy farms shut down their operations last year.
“We’re looking at a disaster,” said Joe Melo, field representative for the California Dairy Campaign. “We’re expected to lose just as many [farms] as we did last year.”
Melo cited high prices on imported feed as the largest source of the problem for California’s dairy farms. According to the CFDA report, total feed costs increased 13.7 percent in 2012, representing 65.3 percent of the total cost to produce a hundredweight of milk.
“They can’t afford their own feed,” said Melo of local dairy farmers. “Corn costs are skyrocketing.”
Melo stated that along with production costs, federal allocation of corn used for ethanol fuel was also driving up cost of feed. Currently, Congress requires that gasoline producers blend 15 billion gallons of ethanol, made from corn, into the nation's gas supply by 2015. This ethanol mandate has subsequently driven up prices of feed for dairy farmers who simply can't afford it.
“Those who are staying afloat own their own land and make their own feed,” said Melo. “Not everyone can afford that luxury.”
Although 2012 has been a particularly rough year for California's dairy farmers, things have been worse.
In 2009, when milk prices fell out of the bottom due to the global downturn, California's dairy farmers lost an estimated $2.12 billion.
According to a CDFA estimate, California dairy farmers lost more than $4 billion from 2008 to 2012.
Melo stated that a lack of action by the state government is only making the situation worse. He claimed that in comparison to other dairy states, California dairy farmers are subject to the harshest water board regulations and receive the smallest percentage of return from processors.
“I think the lack of action in California causes dairies to make less,” said Melo. “The state has the ability to change that and chooses not to.”