BOISE — This year will be tough for Idaho’s 500 dairy operations and most of the state’s milk producers will lose money in 2016, Idaho lawmakers were told March 2.
During a presentation on the state of the Idaho dairy industry, Idaho Dairymen’s Association Director of Operations Rick Naerebout told House Agricultural Affairs Committee members that Idaho milk prices are in the mid to high $13 per hundredweight range now.
Those prices will likely drop into the $12 per hundredweight range before they rebound, Naerebout said. As a result, Idaho’s average dairy will lose money in 2016 and a recovery isn’t expected until some time next year, he added.
“It’s not going to be the best of years for our dairy producers,” Naerebout said.
Dairy is the state’s top farm commodity in terms of cash receipts.
Lower hay and silage prices won’t be enough to save most Idaho milk producers from negative margins in 2016, he said. And while grain prices are also lower, the industry has had difficulty finding the rail cars needed to get grain from the Midwest to Idaho, he added.
“We are seeing the benefit of lower feed costs but the bottom line is that ... milk prices are low enough ... that our average dairy producer is going to have negative margins for 2016,” Naerebout said.
Kuna dairyman Jack Davis told Capital Press that even with lower feed and fuel costs, most Idaho dairy producers need to be making about $15 per hundredweight to break even right now. With prices near $13, he said, that means the average dairy is $2 under cash flow.
“It’s going to be really tough this year,” he said. “There’s just not enough money in it to pay the bills right now.”
Naerebout said what Idaho dairymen are being paid in relation to the Class III milk price is starting to slip from where it was the last few years and that is a clear indication that “we’re at the point where we need another processor or we need one of our existing processors to expand.”
He said IDA officials are working with local economic development groups to try to bring in new dairy processing companies and help existing companies grow.
Idaho’s dairy industry has grown from 358,213 cows in 2003 to 566,611 cows in 2016 and total milk production in the state has exploded from 7.2 billion pounds in 2000 to 14.08 billion pounds last year.
“I feel we’re a mature industry,” said IDA Executive Director Bob Naerebout, Rick Naerebout’s father. “There is room for some continued growth but not a lot of growth.”
The state’s dairy industry is centered in the Magic Valley in Southcentral Idaho, where 296 dairies produce 72.8 percent of the state’s total milk.
The 95 dairies in the Treasure Valley area in southwestern Idaho produce 21 percent of Idaho’s milk and 111 dairies in Eastern Idaho produce 6.6 percent of the state’s milk.