Dairy cows

The drought currently plaguing the nation may cost California 100 dairy farmers before the year’s end, according to dairy industry experts.

A recent article in the San Francisco Chronicle says the issue started in 2009 when ethanol mandates led to a giant spike in grain prices while dairy prices dropped. Dairy farmers who couldn’t afford corn were forced into debt just to keep businesses running.

Then, the drought hit.

The drought is being felt incredibly hard in California—the nation’s largest dairy producing state, with 1,675 dairy farms. According to the Chronicle, “Milk cows are being slaughtered at the fastest rate in more than 25 years because farmers need to save on corn costs.” And Michael Marsh, CEO of the Western United Dairymen, sasy that nearly 25,000 more dairy cattle have already been slaughtered this year than 2011’s totals.

An $8 billion per year dairy industry, California’s dairies are now unable to pay feed bills or loan payments. Slaughtering their dairy cows estimated at $2,000, fetches only $1,200 when sold for meat. And it’s still not enough, according to the Chronicle, “professional trade organization has been regularly referring despondent dairymen to suicide hotlines.”

The situation has gotten so bad that farmers no longer have credit with their feed suppliers: “Feed companies, afraid of being stiffed, are requiring farmers to pay up front, or with a cashier’s check upon delivery. For farmers behind on their feed payments, some companies have even asked for a second deed of trust as collateral on the herd, or the farm.”

Some of the state’s farmers will rally in Sacramento this coming Thursday to ask the state’s FDA Secretary Karen Ross to adjust milk prices, even though the agency said it will not raise prices.

Keep in touch with Jill on Twitter @jillettinger

Image: USDAgov