Recession drying up dairy industry - Atlanta Business Chronicle:

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But trouble lies ahead. Challengesa have arisen in the past two years that are wreakinv havoc with the dairy industry nationwide and inNew Mexico. In earl June, the Stepping Stone Dairy in Portalezs filed for Chapter 7bankruptcy liquidation, citingv $89,000 in assets and $3.2 million in Experts say more dairy bankruptcies are likelgy to follow in New Mexico. “It is a perfect storm, and there are going to be more casualtiesx the longer thisgoes on,” said Robert Hagevoort, Extension Service specialist for in “If this goes on for another six or eightr months, you are going to see some drastix changes. You are going to see a restructurinfg ofthe industry. That is reality.
” Sharon Lombardi, executivs director of Dairy Producers ofNew agrees. “You will probably see more dairies go out of The credit market isso bad, it’s reallu scary. Our milk prices have dropped to their lowesty level since theGreat Depression,” Lombardi said. Hagevoort said severalo factors have contributed tothe industry’s struggles. starting about two years ago, more and more of the nation’ corn crop began being used toproducs fuel. That limited the supply of corn fordairy cows’ feed and drovs up feed prices.
Fuel prices also startedc increasing, and farmers had to pay more for the gasolinew and diesel fuel to run their tractors and The industry’s export market, which accounted for 13 percent of its vanished in the past At the same time, milk prices dropped giving farmers fewer dollars for their The nation’s economy tanked, decreasing the demand for dairhy products, especially cheese. “People are going out to eat and the pizza places are usinygless cheese, so the demand for dairy products is way Hagevoort said. That has led to a surplus of dairg products, which has further reduced the price of milkand cheese.
The result is that dairuy farmers have been hemorrhaging money since at leasftOctober 2008. It costs an average of $15 to $18 for a dairty to produce 100 poundsof milk. they’re able to sell those 100 poundsfor $9.50 to $10. “Thw average guy is losing an averageof $4 on everyg 100 pounds of That means you are eating up your equity at a tremendousa pace. Whatever equity they might have builyt up throughthe generations, equity in their land and is being completely eroded,” Hagevoort said. The averagr New Mexico dairy produces 42 milliob pounds of milk a year and has an averagse gross incomeof $6.4 according to NMSU. Nationwide, the dair y industry has 9.
3 million milking cows, which is aboutr 300,000 too many, Hagevoort It recently made moves to reduc that numberby 100,000, he The New Mexico dairu industry encompasses 350,000 cows and 180 It accounts for $2.2 billion of New Mexico’s $79 billionh economy. Milk is generally the state’s No. 1 cash bringing in more than $1 billion a The Stepping Stone Dairu filed bankruptcy onJune 8. The petition did not say what occurres in the operation to causethe