Greater Cortland area dairy farmers are finally making more for their milk than it costs to produce, after years when the price was less than the cost of production, but it’s nothing like 2014.
The amount farmers are paid vary according to the quality of their milk, but averages between $18 and $18.85 per 100 pounds of milk, according to the U.S. Department of Agriculture and Janice Degni, a dairy and field crop team leader and specialist with Cornell Cooperative Extension.
The Pennsylvania State University Extension reported that milk prices had been increasing for the past year and it projects prices to go to $20 per hundredweight.
Producing milk typically costs $17 per hundredweight.
The price is better than last year’s price of $15.70 per hundredweight, but not as high as the $24 per hundredweight of 2014, said Mike McMahon, co-owner of McMahon’s EZ Acres farm in Homer.
“Even though it’s a welcome relief, a lot of people in this industry are playing catch-up” to pay off debt, McMahon said.
Frequently, farmers respond to a down market by adding cows to increase income.
Likewise, when the market is high, they add cows, creating a bubble and burst cycle.
This increase, he said, will help dairy farms like his, which has 850 cows, but price increases are offset by a new state law requiring farmers to pay overtime.
“It’s one step forward and two steps backward,” he said.
McMahon said he may add another 50 cows to his herd, though that will have to come after all expenses are paid.
“Even though we have been able to meet our expenses, there’s no money left to invest in the capital goods required to be successful,” he said.
McMahon is optimistic the price of milk will increase with the signing of the United States-Mexico-Canada Agreement — Mexico is the largest importer of U.S. milk — but he remains concerned about tariffs with China.
“I’m guardedly optimistic that 2020 could be a better year,” he said. “If we could get a couple years of $20 milk, we’d be in much better shape.”
Paul Fouts, owner of Fouts Farm in Groton, said New York’s increased minimum wage and overtime pay requirements for farms will also eat into profits.
“That raises your labor expenses quite a bit,” Fouts said, and he’s not sure if he’d expand in response.
For conditions to improve, Fouts said, farmers would need greater influence in how prices are set.
The USDA sets prices after farmers have delivered their milk.
“We’re very independent people and the way the system is set up is every man for himself,” Fouts said. “Until the rules change, we’re going to beat each other up.”