May 16, 2010

Kansas dairies feel economic squeeze

Mick Rausch says cows are creatures of habit. So are dairy farmers. At about 6 every morning, Rausch heads out to the holding pen on his farm herds his cows into the barn for their morning milking.

Mick Rausch says cows are creatures of habit. So are dairy farmers. At about 6 every morning, Rausch heads out to the holding pen on his farm north of Garden Plain and herds his cows into the barn for their morning milking. All told, it takes him about four hours.

He has done this twice a day, virtually every day, for 33 years.

"It's all I've ever done," Rausch said.

But the industry isn't rewarding this devotion. Prices plunged well below costs in 2009, driving some dairies, even some of the largest, out of business and placing many more under financial strain.

More than 2,000 dairies nationwide have gone out of business in the past two years, according to the National Farmers Union, because of low prices and falling demand.

The strain falls hardest on smaller traditional dairies, such as the ones in Sedgwick County that are competing with large-scale dairies in western Kansas.

The big problem, said Randy McGinnis of Dairy Farmers of America, a large dairy cooperative based in Kansas City, Mo., is that the recession has pummeled demand overseas and domestically.

As prices dropped last year, Kansas dairies culled their herds, sending their weakest milk-producers to slaughter.

The number of milk cows in Kansas — estimated by the USDA in April at 116,000 — and milk production were down about 5 percent from the previous year.

Kansas dairies produce about 150 tankers of milk a day, according to the state. Forty go to Kansas milk processors, including the Hiland Dairy Foods plant in Wichita, while the rest go out of state.

Times such as these, McGinnis said, become an exercise in how well run a farm is and what kind of costs can be cut out.

Bob Seiler, a dairy farmer in northwestern Sedgwick County with 130 cows, has cut back on hired labor and put off improvements to the operation — really, cut back on everything that doesn't directly affect production.

It's been hard, he said, but he takes a philosophical outlook.

"Like anything in agriculture, in any five years, you will probably lose one year, win big one year and hope the rest are break even," he said.


Rausch, 55, has 43 cows, a tiny operation by Kansas standards. But it must seem like a pretty big number when it comes to milking time.

When milking, he brings in groups of three cows into the milking barn. They walk onto one of two raised concrete platforms separated by a center aisle. They line up at an angle facing away, behind a heavy steel bar to block kicks.

With a practiced hand, Rausch slips a cup of iodine over the teats to disinfect them, wipes them off, and pushes on the milking cups of

the electric milking machine. Each group of three takes five to seven minutes.

"I know every one of these cows, what they like and how much milk they'll give, "he said. "I've raised all of them."

The milk is pumped into an 800 gallon tank refrigerated below 40 degrees. A tanker picks up his milk every two days.

He doesn't know how much he'll make off that load for two weeks, he said.

The cows are about 70 percent of his farming income. The rest comes from growing wheat and soybeans and selling some of his bull calves for meat.

His wife, Nancy, works in the cafeteria at Goddard's Eisenhower Middle School. Her salary helps the family cope when prices go down, he said.

Dairy has gotten increasingly difficult, he said. When prices drop, he loses financial flexibility.

"I thought I'd like to do this until I turn 55," he said. "I'd hoped to be able to just farm. That ain't going to happen."

The toll

The industry is moving away from small farms and toward much larger ones.

To date, 26 dairies of more than 1,000 cows have been built in western Kansas, lured by low-cost land and labor and abundant feedstocks. Western Kansas views large-scale dairies as economic development for the sparsely-populated area.

The state is encouraging more large dairies to come. On a recent Department of Commerce tour of three large dairies, there were visitors from Tennessee, Virginia, Texas and Saudi Arabia.

Even the big guys aren't immune to the price squeeze of the past two years.

Since 2008, two of the big dairies in western Kansas, Sante Fe Trail Dairy in Grant County and West Kansas Dairy in Hamilton County, have closed.

But J.J. Jones, a marketing specialist for the Kansas Department of Commerce, said he's optimistic that, over the long run, people will want to drink milk and eat cheese and that Kansas will remain one of the best places to build a dairy.

"We do see people continuing to move to or expand operations in western Kansas," Jones said.

But there may be fewer and fewer traditional small dairies.

Mick Rausch's brother, Tom, got out of the dairy business in December. He and his father, Francis, dairy farmed for decades south of Garden Plain.

The operation was due for some expensive renovations. And his father was 78 and needed to be able to retire, Tom Rausch said.

And, he said, he wants to be able to visit his grandkids instead of having to milk every day, twice a day.

The plunging prices settled the internal debate. He has moved purely into crop farming on the 1,600 acres he and his father own. He now feels like he has some money to show for his hard work.

"You know you aren't doing what you're doing for nothing," Tom Rausch said.

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