Steve Bontekoe’s milking parlor looks immaculate after a careful cleaning ahead of a state inspection, which he prepared for the afternoon of Thursday, Nov. 14.
Milking is in the early morning and after 5 p.m. Little has changed in this process for him, except recently, milk prices are finally climbing. His family business, Bontekoe Farms, milks about 175 cows. Their fluid milk ends up at Kroger, and is used for cheese.
After five years of high production, low prices and lower demand, dairy farmers are finally getting a little relief in the form of higher dairy prices.
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This is due to an increase in demand and lower milk production. “Increases in demand coupled with a decrease in overall supply have led to positive movement for dairy prices and more profitable levels for dairy farmers,” said Ernie Birchmeier with the Michigan Farm Bureau.
There have been small increases in fluid milk demand and larger increases in cheese and butter demand according to Birchmeier. “The holiday season typically means an increase in baking and baked goods consumption and that is positive for butter demand,” he said.
Settling trade agreements between Canada, Mexico and China will also help farmers.
According to the United States Department of Agriculture (USDA), milk prices were at their lowest March 2018 at just over $15 per hundredweight of milk. It costs farms about $14.50 to $15 to produce and transport this much milk. A “hundredweight” of milk is the volume, which prices are paid on to the farmer, Birchmeier said. A gallon of milk weighs 8.6 pounds so there are approximately 11½ gallons of milk in a “hundredweight.”
Starting March 2019, prices have increased steadily up to more than $19 per hundredweight of milk, the highest they’ve been in years.
Still, lower prices and higher volume of the last five years have severely affected many farms leading to sales of herds and farmers leaving the industry.
Matt Gramer, member manager of Gramer Farms, LLC said they’re still trying to make up the losses over the last five years.
“You’re not trying to gain, you’re just maintaining,” Albert Gramer said. “You learn to survive on these prices.”
Both Bontekoe and Gramer Farms said they’re receiving closer to $16 per hundredweight. Bontekoe said it’s still not a profit business. They’re also still unable to upgrade equipment or facilities, which suppresses connected markets, such as farm equipment.
Farms large and small have been hurt by the dairy market. Recently Dean Foods, America’s largest milk producer, filed for bankruptcy. This was in part due to its largest customer, Walmart, which began processing some of its own milk in 2017, according to CNBC.
Locally, Corner Oak Dairy Farm in Mundy Township no longer produces milk.
Milk consumption had declined steadily since 2000, dropping from 23 gallons to 17 gallons per capita according to the USDA.
Neilson data shows that non-dairy milk is now at $1.8 billion in sales, chipping into cow’s milk, which is still king at $12 billion. The most popular non-dairy milk by far is almond milk.