Dairy crisis puts county's economy in peril
Dairies are shutting down in Tulare County and it is the high price of feed, namely corn and grain, that is creating those high prices.
In the past two years Tulare County has lost about 4% of its dairies and scores more are at risk of closing as the cost of doing business exceeds the return.
Creating the situation is the high cost of feed. Cows need a lot of feed and they need feed that is high in nutrients so they can produce not only high quality milk, but a lot of that milk.
The problem is simple math: The cost to feed a cow is more than the value of milk that cow produces.
Because of the Midwest drought, an already high cost for corn and grain has gone even higher. Local dairyman Eric Borba and Tulare County Agriculture Commissioner Marilyn Kinoshita both said it has been the push for ethanol fuel additives that has pushed up the cost of corn and grain. A few years ago getting paid about $12 per hundredweight — how milk is measured — would keep a dairy afloat, but today they need $16 to $18 per hundredweight. and the price dairymen get is not that high
Compounding the situation is that it is nearly a repeat of what occurred in 2008-10. While most dairies survived that time, they came out of it with little equity and borrowing power.
Today, many dairies are selling cows to survive.
Milk is the No. 1 commodity in Tulare County. It had a value of more than $2 billion last year and there are more than 500,000 dairy cows in the county. However, the number of cows and dairies is falling and could fall drastically further without some relief. With fewer dairies and cows, there will be the need for fewer workers both at the dairies and the many creameries in the county.
Borba pointed out that the amount of corn and grain needed for ethanol nationally is mandated, yet when the crop is reduced by drought, that mandate does not change. That sends prices soaring. The ethanol requirement needs to be at least temporarily adjusted to bring some price relief for dairymen.