California Dairies Buckle Under Feed Costs

US - Skyrocketing feed costs and weak milk prices are forcing growing numbers of California's dairy farmers to sell their herds or file for bankruptcy.
calendar icon 22 August 2012
clock icon 2 minute read

The situation has become so dire that at least one dairy cooperative is launching a crisis hot line for despondent dairymen and their families, according to The Fresnobee.

"Things are ugly and getting uglier," said Riley Walter, a Fresno bankruptcy attorney representing many financially distressed dairymen.

In the past eight months, 28 San Joaquin Valley dairies have filed for bankruptcy in the US Bankruptcy Court's Fresno office, up from 24 in 2011 and 10 in 2010.

Most bankruptcy filings this year have been since April, and many more are expected, Mr Walter said.

"This is devastating to so many families," Mr Walter said. "And it is not over."

Court records show that farmers -- several who have multiple dairies -- owe more than $100 million to lenders, feed companies and other dairy suppliers, putting some suppliers at financial risk as well.

One feed company, Western Milling in Goshen, is owed more than $6 million.

Collectively, several other Valley feed companies, including J.D. Heiskell & Co. in Tulare and A.L. Gilbert Co. in Oakdale, are owed more than $2 million.

Farmers blame the high cost of corn on the drought and the nation's alternative fuel policy that consumes 40 per cent of the corn crop to make ethanol.

Without enough cash coming in from milk sales, many farmers aren't able to pay for their cattle feed. And they are running out of options. Many borrowed heavily after 2009 when milk prices collapsed, export markets dried up and farmers had an oversupply. Dairy analysts say that while milk prices are starting to rebound, they aren't keeping pace with feed costs.

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