MACHIAS, Maine — “We are the only business where our product goes out of the yard and we have no idea what we are getting paid for it,” Ray Wright of The Wright Place dairy farm in Clinton said Wednesday.
The Wright family farm, where 700 cows are milked each day, has been operating since 1956, but this is the second year in a row that milk prices — set by the federal government — have slid downward.
“This summer, we were only getting $12 a hundredweight,” he said. “The price never went down in the stores, but it sure did on our end.”
Meanwhile, state and industry studies have determined that it costs between $16.73 and $24.51 per hundredweight to produce milk in Maine.
Farmers are saying that 2010 was a year of extremes for the state’s dairy industry.
“Farmers endured the second consecutive year of some of the lowest milk prices since the Great Depression, while simultaneously experiencing one of the best feed crop seasons in recent memory,” Maine’s Commissioner of Agriculture Seth Bradstreet said Wednesday.
Maine is now down to 309 dairy farms — there were 330 a year ago — yet dairy continues to be one of the state’s largest agricultural sectors.
“Dairy has long been considered the cornerstone of Maine agriculture, providing the link between animal and crop agriculture across the state, and providing the critical mass of sales to sustain feed and equipment dealers, veterinarians, and other agriculture businesses,” said Bradstreet.
Dairy is a $570 million business in Maine, providing $25 million in state and local taxes, managing 700,000 acres of open space and woodlands, and employing more than 4,000 Mainers.
Bradstreet said that one of the state’s advantages is the diversity of its dairy farms — organic, conventional, large, small.
“All of the state’s farms are family-owned and operated and many of them are run by the third generation or higher of family members,” the commissioner said.
“The relationship our farmers have with their animals is one of partnership — if the animal is not happy and healthy, she will not give high quality milk,” Bradstreet said. Cows are an extension of the family, not a minimum partner in the farm.
“In Maine, cows are known by name, not just by a number,” he said. “And everyone works hard.”
Maine farmers continue to face plenty of challenges, he said, including milk prices, taxation, animal health, scarcity of large-animal veterinarians, lack of a reliable work force, and environmental regulations.
Rick Kersbergen of the Waldo County University of Maine Cooperative Extension office said that farmers are still trying to recover from a disastrous 2009.
“While milk prices have rebounded some, and the summer of 2010 was a pretty good growing year, many producers have not been able to dig out of the hole that was created by low prices and poor quality feed last year,” Kersbergen said.
“The big issue that has surfaced recently has been the sharp rise in corn prices over $5 per bushel, driving [feed] costs up for dairy farmers,” he added. “Since purchased grain costs can eat up 30 to 40 percent of a dairy farm’s gross income, a significant rise in grain costs really impacts the potential for any profit.”
Kersbergen said the Cooperative Extension will be conducting its third cost of production study for the Maine Milk Commission and the Department of Agriculture and it should be completed in the spring of 2011.
Jon Olson, the executive liaison between the Maine Farm Bureau and the Legislature, said nothing big is looming as far as proposed bills regarding the dairy industry but that it is still early in the process.
He echoed farmers’ comments that it was a great summer weather-wise and crops looked good. “They are also still very encouraged by the Maine Legislature’s support of the tiered stabilization program,” Olson said.
The stabilization program, which has been in place since 2004, provides payments to farmers when the price of milk drops too low. It is funded by milk processors and is designed to stabilize the industry, but the payments have not been sufficient to make up for the losses.
“Maine is fortunate that the amount of milk produced in Maine — 590 million pounds, or 68 million gallons — is roughly equivalent to the amount of milk and other dairy products that Maine people consume each year,” Bradstreet said. “This is a unique equilibrium.”
Many other states have lost so many dairy farms that they now have to import their milk.
Back at The Wright Place, Ray Wright said it is a relief that prices are starting to rise. When asked if holiday dairy purchases are pushing that upturn, he answered “Who knows? There are so many variables in the dairy business.”