By JAMES HAGGERTY
The (Scranton) Times-Tribune via Associated Press
SCRANTON, Pa. (AP) -- Pennsylvania lost 14 percent of its dairy farms between 2006 and 2009, new U.S. Department of Agriculture data show.
Licensed dairy operations in the state, which includes the vast majority of milking farms, decreased to 7,400 in 2009 from 8,610 in 2006, according to the National Agricultural Statistics Service. The nationwide dairy farm total dropped 11.4 percent over the same period, to 54,942.
The data point to the effects of a trough in milk prices in late 2008 and 2009 that accelerated flight from dairy farming. Farmers say a rally in prices this year fails to provide the financial balance they need.
"The farms we see now are survivors, but that doesn't mean that all the ones we see now will be survivors next year," said James Dunn, an agricultural economist at Penn State University. Dairy farmers borrowed money and reduced herd sizes to cope with the slump, which dropped the average payment for 100 pounds of milk in Pennsylvania -- a standard measure equivalent to 11.6 gallons -- from $20.26 in November 2008 to $12.90 in June 2009. The crisis was brought on by U.S. overproduction and a collapse in exports.
"The biggest concern is that people borrowed the money and they've got the cash flow now, but they can't pay off the debt they accumulated in 2009," said Paul Fetter, who milks 64 cows at his Mill City farm in Wyoming County. "Some of the guys I talk with owe $1,000 to $2,000 per cow from 2009."
Will Keating, a Mount Cobb-area dairy farmer, has reduced his milking herd to 40 from 52 cows and sold 35 of his 60 heifers -- young cows that have not produced a calf.
"You have to get rid of something to make up for the losses," Keating said. "You try to catch up and you just can't. It gets tiring."
Average bulk milk payments in the state for 2009 ran about 95 cents less than median operating costs. This year, the state average payment for 100 pounds of milk through August was $17.61, and the production cost average for the same volume was $15.66.
"This year has ended up, particularly the first half, with pretty strong margins," said John Frey, executive director of the Center for Dairy Excellence, a promotional agency in the state Department of Agriculture.
"A lot of people have made hay with these higher prices, cleaning up their balance sheets and other things," Dunn said Wednesday.
Dairy farmers, though, point to higher costs offsetting payment increases.
"The price of feed has been skyrocketing, and the price of fuel is going up," Keating said.
Corn futures hit a two-year high this week on commodities markets, and the price of diesel fuel is up 17 percent from October 2009.
Mark Darling rebuilt his dairy barn in Fleetville after a fire in 2003 and is rethinking his investment.
"I'm going backward every day and there's just no way to make it up," said Darling, who milks 180 cows. The milk cooperative he belongs to will pay Darling $15 per 100 pounds in January and he said he needs $16.50 to break even.
"Three years ago, you couldn't convince me to quit," Darling said. "When you can't pay the bills, the stress is unbearable.
"We're just going to see how we can phase out."
Darling's attitude is typical of dairy farmers worn by uncertainty.
Fetter started driving a school bus in 2009 to make up for income lost from the farm.
"There's a lot of people out there that are tired of the struggle," said Fetter's wife, Mary. "It's tough to stay optimistic."
Information from: The Times-Tribune, http://thetimes-tribune.com/
Copyright 2010 The Associated Press.