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Dairy farmers struggling through hard times

Allan Wendt is one of two dairy farmers in his area around Height of Land Township — an area where there was once several. He says he expects to lose as much money this year as he made last year during a record-high year. DL NEWSPAPERS/Brian Basham

Allan Wendt has been dairy farming his whole life.

“My dad bought this farm in 1960,” he said from his home in Height of Land Township. “I took it over 16 years ago.”

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Wendt’s 19-year-old son, Andrew, is now hopping on board this three-generation way of life, and while Allan Wendt welcomes the help, he also has concerns over their futures — both the personal kind and the market kind.

Milk prices have plummeted by more than one-third over the past six months. (Not necessarily for consumers, but for creameries that purchase the raw product from farmers.)

According to Minnesota Public Radio, China is projected to slash imports this year by about $1 billion. It has been a major American milk importer the past few years. And next month, the European Union will lift production caps on its farmers so they can produce as much milk as they want.

These are a couple of the reasons farmers closer to home are feeling a serious pinch recently.

“It was close to $26 per hundred weight of milk — now it’s $15.04,” said Wendt. “That’s like you getting paid $26 per hour, then being told you’re being cut down to $15 per hour.”

This drop in milk prices comes after a record-high year last year, but according to Wendt, a successful year’s money goes pretty quickly when you’re still catching up from the bad years.

“We made money last year, but we’re losing that much this year,” said Wendt, who says out of the $250,000 that runs through his dairy farm every year, they’ll take home around $20,000 of that.

“And that’s because inputs are getting so crazy,” said Wendt, pointing to his tractor. “Ten years ago that tire was probably $250. Now it’s $1,250. Everything is eight-fold.”

Everything, says Wendt, except milk prices.

Equipment, equipment repairs, insurance — nearly everything it takes to run a farm is now helping run those farms right out of business, says Wendt.

“Twenty-five years ago there were 15 to 20 dairies down this road, and now there are only two of us,” he said. “There are probably only 50 dairy farmers north of Highway 10, and there used to be thousands of them. We don’t count how many go out of business anymore; we only count how many are left.”

Small dairy farms throughout Minnesota are giving way to what are referred to as “mega-dairies” which are exponentially larger than Wendt’s. And often times, larger can be more doable.

A USDA study showed that average production costs on farms with 1,000 cows or more can be as much as a third less than on 100 cow operations, according to the Minnesota Public Radio Report.

The middle man

Wendt says in addition to inputs inflation, farmers locally have taken hits as area creameries have either been bought out or have changed their policies on co-op payouts to farmers.

“When AMPI bought out Cass Clay six or seven years ago, we lost all of our patronage,” said Wendt, referring to “patronage” as a sort of share or stock farmers build up in a co-op.

“So farmers build the co-op, then a company comes in and buys it, and we don’t get paid patronage,” said Wendt. “They’re not even real co-ops anymore,” he said, adding that this change in structure also adds to the farmers’ difficulties.

Supplemental help scarce

Cash crops meant to supplement incomes are barely worth the cash it takes to work the land these days, says Wendt, and statistics back him up.

The median income for crop farms in 2014 was $17,003, down from $48,120 in 2013 and $260,940 in 2012, when drought impacted many states but not Minnesota.

Still, he stays the course.

“It’s not something you can just get out of for a while when it’s down and get back in later — you have to ride it out,” said Wendt, who says it’s either that or quit for good.

And he isn’t willing to do that. Despite what he says are the 100-hour-plus weeks and the 3 a.m. milkings, he is where he belongs.

“It’s a way of life,” he said simply.

This “way of life” is supposed to be Wendt’s retirement, but he knows that’s quite a ways off still, as one mistake six years ago set him back significantly.

“My nutritionist goofed up the ration for my cattle,” said Wendt. “The herd got sick and we went from about 90 head of cattle to 60.”

Wendt says the insurance company out of Chicago that should have covered that fought the claim, and he didn’t have the means to fight back.

“So, we had things almost paid off, but now it’s almost like we started over with debt,” said Wendt, who says banks also know the industry is tough.

“Now would be the time to get into dairy farming while the prices are so low, but good luck getting a loan for it,” he said.

Wendt says despite the hard year that’s surely to come, he’ll tighten up and make it through to what he hopes are better times.

That kind of optimism runs a little more rampant in the Dunvilla area, where Phil Rotz runs Twin Oaks Dairy.

Rotz says when prices plummet like this, he sees farmers getting out because they can’t take one more ride down. However, he seems to ride with a little more ease.

“If you watch the futures (market), you know it’s coming,” said Rotz. “It’s the way farming goes – it goes up, and it goes down. And when it goes down, all it does in my opinion is force you to take a look at where you’re spending your money, tighten up some, and so then when it’s up, it makes you that much more profitable.”

Rotz says he knew this tough year was coming, but lower feed prices, lower fuel prices and higher beef cattle prices (which accounts for about 20 percent of his herd), will all help.

What does concern him though, is when more and more dairy farmers give up, it weakens the infrastructure that is in place locally supporting them.

“It’s tough to get vets to stick around because the demand isn’t there, and it’s already tough to find people to work on the equipment,” said Rotz, who agrees with Wendt in that repair costs for farm equipment has drastically risen.

Another common thread he has with Wendt is that they both seem to have dairy farming in their blood – a trait that keeps them holding on tight.

“It’ll go up,” said Rotz. “I don’t know when, but it will.”

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