Low milk prices are a big headache for Michigan’s family dairy farms

SLIDESHOW>>> Corner Oak Farm co-owner Julie Juengel turns off a milking machine. Her farm, which she runs with her family and a small group of employees, produces 11,000 pounds of milk daily. (Photo courtesy of Tim Jagielo of the Tri-County Times.)

Jason Juengel, 17, of Mundy Township, works in the milking parlor of Corner Oak Farm, his family’s dairy business in Genesee County. The Michigan dairy industry is struggling with a nearly four-year wave of low profits, lower demand and a worldwide milk surplus. These factors are pushing some dairy farmers out of the business.  (Photo courtesy of Tim Jagielo of the Tri-County Times.)

It takes baby calves to make milk. For a cow to produce milk, it must have given birth. (Photo courtesy of Tim Jagielo of the Tri-County Times.)

Amy Juengel hoses down the milking parlor at Corner Oak Farm in Mundy Township. (Photo courtesy of Tim Jagielo of the Tri-County Times.)

Jason Juengel, 17, leads cows to the milking parlor at Corner Oak Farm. (Photo courtesy of Tim Jagielo of the Tri-County Times.)

Corner Oak Farm co-owner Julie Juengel works at her farm. (Photo courtesy of Tim Jagielo of the Tri-County Times.)

A cow at Corner Oak Farm. (Photo courtesy of Tim Jagielo of the Tri-County Times.)

Cows at Corner Oak Farm. (Photo courtesy of Tim Jagielo of the Tri-County Times.)

MUNDY TOWNSHIP — It takes approximately three hours to milk 180 cows. Wearing rubber boots, Corner Oak Farm co-owner Julie Juengel walks up and down the milking parlor floor, making sure the milking machines are attached to the cows. She shuts off the ones that are done for the night.

Juengel’s daughter, Amy, and son, Jason, 17, are helping to clean and treat the udders. When finished, they guide the cattle away from the parlor. Most know where they’re supposed to go, but are wary of anything new in their path — like a journalist with cameras.

While everything appears to be fine at the farm outside Flint and the grocery aisle, there is deep trouble for Michigan’s 1,600 dairy farms. Some 97 percent of them are family-owned, according to the United Dairy Industry of Michigan.

For nearly four years, dairy farmers have been receiving approximately half the price for their milk, and dealing with escalating expenses. Worldwide, there is a surplus of milk, which is good for everyone but the milk producers.

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This surplus is pushing some producers out of the business and some have even considered suicide, according to milkbusiness.com.Experts say the problems are particularly acute in Michigan, which is the nation’s fifth-largest producer of milk.

At Corner Oak Farm, the husband/wife team of Peter and Julie Juegel are hanging on by a thread, trying to keep the business going until it’s profitable again.

“It’s rough,” Julie said. “We’re managing, we’re making cuts.” They’ve laid off employees, so everyone stepped in to do more.

“It makes me feel like, why the heck am I doing this, still,” Peter said. He said Michigan farms are in rough shape and it won’t be fixed anytime soon.

Farmers are used to wavering milk prices. A bad year every so often is weathered by equity and savings. However, going on four years is too much for many farmers to endure.

Peter and Julie are living paycheck to paycheck, and working with their bank to make their loans more manageable.

Too much of a good thing

The milk surplus is caused by farmers maximizing production through better technology, feed and care of the animals, while there is less demand.

“Each animal is giving more every year because of genetics, better feeding, better care,” Peter said. “All those things have improved.”

They can buy “sexed semen,” which determines sex, to inseminate their cows, leading to 90-percent females being born, leading to more milk-producing heifer cows.

Even the European Union (EU) affects the daily lives of farmers here. The EU lifted production restrictions making milk everywhere less valuable.

The Juengels’ farm produces 11,000 pounds of milk each day, which is a suppressed amount. They’ve decreased production, and Peter believes that if everyone dropped 3 or 4 percent, the surplus would end. “That’s 3 to 4 percent of milk you have to find a home for. No one really wants it, so it lowers the price for everything,” Peter said.

Ernie Birchmeier is Michigan Farm Bureau livestock dairy specialist working out of Lansing.  He works on behalf of the agricultural industry. “There’s a lot of milk out there,” he said.

This is a problem. In the last four years, dairy farmers have added 1,000 cows each month to the overall dairy herd. He said there are approximately 430,000 today in Michigan, compared to 300,000 cows in 2000.

Each cow produces 26,000 pounds of milk per year, he said. This is more than the rest of the country, to the tune of a gallon of milk per cow, per day, according to the United States Department of Agriculture Statistics Service.

A problem with price

While Michigan dairy farmers are receiving about $14.50 per 100 pounds of milk, store prices list milk at between $2.50 to $3.99 per gallon.

Ken Nobis is president of the Michigan Milk Producers Association, a co-op that markets Michigan milk, and is a dairy farmer himself in St. Johns. He said there is a total disconnect between what farmers receive for the fluid milk they sell to processors and what retailers decide to charge.

Milk producers sell their milk to a processor, who then sells it in its final product to a retailer, who sets the final price.

Peter said that Michigan farmers get $2 less per 100 pounds compared to other Great Lakes states, adding up to $85,000 less in revenue each year.

“Somebody’s out there producing that food, and it’s important that that food stays profitable so they can continue to produce it,” said Birchmeier. “The food doesn’t just show up on the grocery store shelf without somebody producing it.”

Peter and Julie know they’ll sell — their children aren’t interested in the family business, but they’d rather sell when it’s profitable.

While they struggle and work most days of the week with a small, but hard working, crew, Julie said she loves the work itself. “It’s an uphill battle it seems like, but it’s a beautiful way of life. I don’t think I’d want to do anything else,” she said.

Tim Jagielo is multimedia editor of the Tri-County Times. This article originally appeared in the Tri-County Times on April 13.

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Comments

Barry Visel
Tue, 05/15/2018 - 9:20am

Why are 1,000 cows/month being added to the herd when prices are down? Why do MI farmers get $2 less/100 pounds than surrounding states. How does MMPA fit into the picture? Are any taxpayer subsidies involved with milk ( and other Ag commodities) that are part of this, and the related, Ag stories you’re reporting?

Frenchy Fred fr...
Wed, 05/16/2018 - 3:07pm

Reason why cow is added every month even in face of oversupply and lower prices is because farmers try to maintain cash flow and spread fixed costs over larger volume because of the lower prices... it lead to a vicious circle that make oversupply even larger and larger. Dairy farmers in Canada raise or lower their individual production to match domestic demand to avoid creating that kind of mess that puts family farm out of business. Many US dairy farmers what some kinds of supply management to be put in place right now

PLombard
Tue, 05/15/2018 - 11:03am

I will be glad to help dairy farmers by drinking more milk (and eating ice cream.) It's sometimes difficult to identify the milk I like though: non-CAFO, Michigan farms.
Thanks for the article.

Arjay
Tue, 05/15/2018 - 1:04pm

When Henry Ford put the world on wheels, i’m sure buggy whip makers went out of business. When people started switching to soy milk and almond milk, I’m sure the demand for cow milk went down. One has to balance supply and demand to be successful. Why is the MMPA not doing this by research to increase demand. No wonder prices are dropping when all the talk (semen selection, genetics, better care, etc) is of increased supply.