Having called the last few months the worst time they have ever seen in dairy farming, Norm and Mary Kerkman are asked if they soon will be forced to sell out.
”By the end of the year,” says Mary, who is training for a paralegal job.
”Before then,” counters Norm, who has lived on this farm a few miles north of the Illinois-Wisconsin line all his life, and, for the first time, is looking for work off of it.
Their pessimism was echoed in a series of interviews with farm families who are members of the Wisconsin Dairies Cooperative and who expect little relief from the soaring costs amid rock-bottom prices of dairy products. Nor do they look for much help from Washington, where Congress is grappling with proposals to increase dairy price supports in the face of budget constraints. While the families acknowledge working long hours and having little spare time for relaxation or vacations, all said they prefer their lifestyle even with economic hardship.
The Kerkmans, too, deeply regret having to abandon their way of life. They are not alone.
They will join thousands of other dairy farmers in Wisconsin and other states expected to be squeezed out of business between the low milk prices and unrelenting cost pressures.
Mike O`Brien, local representative of Wisconsin Dairies and manager of the milk plant in Genoa City, Wis., said another six or eight dairy farmers in this area will quit by the end of the year. According to the state agricultural statistics service, 840 Wisconsin farmers have left the dairy business in the first six months of 1991.
As Leonard Nerge, who operates a dairy farm with 38 cows a few miles southwest at Harvard, Ill., puts it: ”Farmers sell at wholesale and buy at retail.”
Or, says George Hansen, administrative supervisor of Central Milk Producers Cooperative, which is owned by 12 dairy cooperatives and markets the majority of milk in the Chicago area: ”Dairy farmers are paying 1991 prices for goods and services and receiving 1978 prices for their milk.”
Indeed, farmers in the Chicago region, which includes northern Illinois and most of Wisconsin, were paid $10.46 per hundred pounds of milk for April production, the lowest price since $10.31 in September, 1978. That also represented a drop of 30 percent from the record price of $15.08 set in December, 1989.
Several factors had combined to push milk prices higher. The 1988 drought parched pastures, reduced the hay crop and forced farmers to cull more dairy cows than usual. As milk production declined, cheese manufacturers produced more than normal, building excess inventories. At the same time, overseas demand rose for U.S. nonfat dry milk.
When milk production returned to normal and cheese production eased, prices paid to farmers began to drop.
While the price has edged up since April to $10.89 in the June milk check, that doesn`t come close to matching the cost of production for most farmers.
One exception is Bob and Sue Crane, who milk 88 cows on their farm near Burlington, Wis. They enjoy farm life and are optimistic about the future. The children are active in 4-H and Sue is the first woman ever elected president of the Young Farmers group of Wisconsin Dairies.
”If you offer me $100,000, I wouldn`t quit,” says Bob.
The Cranes figure costs at about $9 per hundred pounds primarily because they carry a low debt load. Bob notes that their land, around 600 acres, is close to being paid off, and Sue adds that ”we don`t buy anything if we don`t have to.”
More typical may be Dave and Kristi Parrish, neighbors of Leonard and Dorothy Nerge and son Duane near Harvard. Dave quit his job as an electrician for a utility company six years ago to buy out the dairy operation of Kristi`s father ”because I liked the challenge of working for myself.”
Now, he says, ”its frustrating just to be surviving,” faced with low prices, a heavy debt load and rising costs for everything from feed to insurance.
”Our liability insurance has gone up 30 percent and hospitalization 10 percent while we`ve taken a 30 percent cut in pay,” says Nerge.
The Parrishs, who have two children, say their hospitalization insurance was canceled after only three small claims over several years.
”We were told we`re too high a risk,” says Kristi.
On the income side, Parrish, who milks 50 to 60 cows, doesn`t think an increase in the price support level is the answer. Rather, he would abolish the patchwork system of federal milk market orders mandating varying prices in some 41 regions around the country.
”A hundred pounds of milk is 100 pounds, wherever it is produced,”
Parrish said. ”We ought to be able to sell milk anywhere in the country.”
Kerkman, however, believes a current proposal to raise the price support to $12.60 would help. He noted that his own costs of production are around $13 a hundred pounds, ”not counting labor. To be on a par with a job in the city, we need to get around $15.”
Last week, the House Agriculture Committee ignored an administration veto threat and approved a 25 percent increase in dairy price supports and production quotas on dairy farmers.
Final action isn`t expected until September because strong opposition is anticipated for a Senate version of the bill expected to be introduced shortly by the Agriculture Committee chairman, Sen. Patrick Leahy (D-Vt.).
Opponents argued that the bill has no chance of becoming law, and ranchers fear the dairy program would drive down beef prices because large numbers of dairy cows would be sent to market beyond normal slaughter rates.
The bill would raise the minimum dairy price from $10.10 per 100 pounds to $12.60 and assign production quotas to farmers to limit milk surpluses. The government supports dairy prices by buying excess production in the form of cheese, butter, and nonfat dry milk.
At the higher price support, an extra $18,000 a year could go to the average Midwest farmer, but the Agriculture Department estimated retail milk prices would rise 10 percent a year.
The committee had voted 23-21 to reject the alternative bill backed by Republicans and California Democrats that would have raised the price support to $11.60 and controlled surpluses by paying farmers to take cows out of production.
”Dairy farmers are too damned efficient,” says Kerkman. ”They produce too much milk.”
Statistics bear him out. While the number of milk cows in the country declined by 11 percent, almost 1 million total, from 1974 to 1988, annual production of milk per cow jumped 38 percent to 14,213 pounds. U.S. output rose 26 percent to 145.5 billion pounds.
And the trend continues. In April, according to Agriculture Department estimates, cow numbers eased 1 percent from a year earlier to 10 million, but production per cow increased 2 percent to 1,290 pounds, and total output rose 1 percent to 12.9 billion pounds.
The Kerkmans milk 55 cows, own 116 acres, rent another 50, and find themselves ”living off our assets.” A fire five years ago destroyed the milk barn, which was replaced with a $150,000 structure-an investment they wouldn`t make now.
In an important way, the Kerkmans are more fortunate than farmers farther north in the state: The value of the land continues to increase because developers are hungry to build homes on 3- to 5-acre sites or to build new golf courses.
They expect that to be the ultimate fate of the dairy farm, begun by Norm`s father in 1929.
