Pat Bolday has a theory about the challenges facing dairy farmers. “You (have) really got to be small that you handle everything yourself and you like what you do, or you have to grow to a really good size to be efficient,” he said. “That’s the new terminology. You have to milk so many cows to be efficient.”
On their farm in Emmett Township, Bolday and his family milk 90 cows, producing about 700 gallons a day. The family also sells cash crops, including hay, oats and corn, and sells compost and cow manure.
The combination, he said, helps them get by despite milk prices below what it costs them to produce it. American dairy farmers everywhere are selling below cost into a market already glutted with an oversupply of milk. While forecasters were expecting an uptick in prices this fall, uncertainty brought on by recent U.S. trade disputes is giving farmers new worries.
Jim Reid, whose family runs a dairy farm in Jeddo, is president of the United Dairy Industry of Michigan, the communications umbrella for the Dairy Council of Michigan and American Dairy Association of Michigan. “But when tariffs were announced, on the first of July — that’s when the markets reacted negatively, and prices not only in dairy, but all the other commodities started to drop off,” Reid said. Following President Donald Trump's trade decisions Mexico threatened to target imports of U.S. cheese and China turned to tariffs on multiple dairy products.
Pat Bolday said he balances dairy along with sale of cash crops to keep up on his farm in Emmett Township. Chris Wolf, a professor in the agriculture, food and resource economics department at Michigan State University, said the trade wars have certainly exacerbated distress in the dairy industry. He said farmers were getting $15 to $16 for 100 pounds of raw milk in the spring. Farmers were paid as much as $24 per 100 pounds in 2014 — a year widely accepted as a record success in the industry. Since then, it has gotten as low as $13 to $14.
The small boost this fall would’ve helped, Wolf said, but it wouldn’t have solved the larger challenges facing farmers. “It’s not nearly what they were hoping for,” he said. “(Prices) may end up being a lot less than that. Markets don’t like uncertainty.”
Reid said, “Now, instead of having a positive outlook of better prices in the near future, it appears we’re going to be stuck in this same range of prices until something frees up — like a trade deal,” he said. This month, Canadian tariffs on dairy have been the target of Trump’s NAFTA talks. And Ken Nobis, president of Michigan Milk Producers Association, said their hopeful talks will also yield a trade agreement with Mexico.
“So, I think it’s put some wind back in our sails,” he said.
Making adjustments, getting a boost Reid’s farm is family run — perhaps even more so now than before. With 230 cows, it ships about 4,000 gallons every other day. The milk goes through the Michigan Milk Producers Association, he said, and usually ends up at a Kroger bottling plant in Livonia. Bolday said his usually goes to Calder’s or a VernDale drying plant for chocolates. Both admitted their type of farm could be a dying breed.
Bolday said he could point to just 10 dairy farms still around St. Clair County, and of the roughly 1,300 dairy farms across the state, Reid said 150 probably closed up shop over the past 12 months.
Most of those closing are operations with 500 or fewer cows, Reid said. “I think I can speak for most of the guys in dairy. We’ve been operating below the cost of production for about three and a half years. It’s hard for any business at that low a level,” Reid said. “… At the farm level, most of us are just worried about how we’re going to pay the bills. Because we’re not getting enough for our product to cover our cost. We’ve had to make adjustments.” Nobis said while the recent dairy industry’s downturn and oversupply may have meant lower prices for consumers in stores, it may not stay that way long term as farmers quit. “Dairy isn’t something you’re in and out of,” he said. “To build back production — while you’re doing that, you could see it increase in prices.”
Right now, Reid said he and his wife are mainly living off his wife’s retirement plan from working at McLaren Port Huron and Social Security. Their son, Jeff, also works full-time on the farm with the hope he’ll take the reins from his 68-year-old father.
Reid said they would usually milk their cows three times a day. However, within the last couple of weeks, he said they moved to two times a day to save on costs. The farm used to have four family members working full time and eight part-time hired hands. Now, the hire hired help is gone. Pam Reid works with calves, Reid said, his brother with cattle, and he and Jeff Reid are working to harvest this season’s corn.
“My son and I are trying to do it ourselves,” he said. “We normally would have a couple other guys this harvest season.” They’re also saving in other ways, Reid said.
They put off buying new equipment and doing repairs or borrowing equipment where they can. They’ve also do more of their own routine veterinary care, such as vaccinations, to save on vet costs. Scott Lamb, who runs a family farm near Jeddo, said he has made similar adjustments, particularly in doing equipment maintenance. But he said the farm is still milking the 250 cows thrice daily. “We’re not breaking even. Our cost of production — I don’t know off the top of my head — but we’re under,” Lamb said. “… (We take it) one day at a time. I (have) got a son that’s going off to college and wants to come back and do dairy. We’re in it for the long haul. But you just try to stay optimistic and try to do the best you can with your cows.” Despite the challenges, local farmers said they aren’t complaining. “We made the choice. We like what we do,” Bolday said. “I don’t want to be like, ‘I’m stuck here, and we’ve made the investment. So, you keep going.’”
And while some like Lamb said they try to stay out of the politics that affect their industry, Reid said he gets why it’s happening. “Things were going to get back toward where we could cover all of our costs. But this last action, I think farmers understand what’s going on,” he said. “We’re not blaming anybody for these tariffs. They’re probably necessary to get everything reset, and we think when the dust all settles, we’ll all be in a better spot. “But we’re suffering right now, and I think that’s why they came up with the aid package — this $12 billion. I don’t want the readers to think that we’re asking for it.”
The Trump administration announced plans to provide $12 billion to farmers negatively impacted by the trade war in July, and funds from the bailout were expected to be disbursed as soon as this month.
Reaction was largely positive to the news. The group Agriculture Leaders of Michigan, which includes Nobis, released a statement saying it was pleased with the step.
“However, farmers and those in the agriculture industry want to earn their money through the market,” it said. “Agriculture needs a long-term trade solution that eliminates the economic uncertainty created by current trade policies.”
Wolf said the federal aid would only help on a short-term basis. For longer-term solutions, he said a larger priority is to get a new processing plant up and running “so farmers can find a home for milk.”
The White House isn’t the only entity that’s also taken steps to aid fledgling farmers in the wake of a trade war it initiated. According to the Michigan Farm Bureau last month, a new dairy insurance service through American Farm Bureau Insurance Services is expected by early October to cover potential revenue loss and provide another layer of support for the dairy sector “battered by losses over the past four years.”
When the market was good in 2014, Reid said plenty of dairy farmers grew their facilities, though he didn’t personally. In expanding to meet the demand of the time, Wolf said a lot of farmers also consequently took on a lot of debt. Now, four years later, he said most people have cut everywhere they can.
“Part of it is timing. A lot of it has to do with their financial risk relative to what they have borrowed. Ways of dealing with it depends on whatever their situation is,” Wolf said. “It’s kind of hard to talk about what the general situation is other than there’s a whole lot of financial stress for everybody.”
Without final resolutions, Nobis said, “I don’t think anybody wins.”
“You can only burn equity so long and you just have to call it quits,” he said. “We have seen an uptick in the number of people leaving the industry because they don’t see a bright future ahead.”
Dairy cows eat Tuesday afternoon, Sept. 4, 2018, at Reid's Dairy Farm in Grant Township.
(Photo: Brian M. Wells/Times Herald)
And so, they wait.
In the meantime, Bolday said both his and his son’s wife work, adding, “They get our health insurance. That helps me huge.”
But they’re still feeling the squeeze on the legacy of their operation, and it’s something he still hopes to keep around for his son down the road.
“That’s the problem. Here’s these families trying to survive and then you have these giant farms that keep growing. You either have to grow or they go out of business,” Bolday said. “… What other job would you still be doing if they cut your pay 30 to 40 percent? You wouldn’t do it anymore. You’d be looking for a new job.
“That’s what we’re facing. Our pay has been cut, and so we have to adapt to live on way less. You’re surviving. You can’t replace a piece of equipment, so you’re surviving and hoping nothing breaks down. That’s the hard part of it.”