Whatcom dairy farmers expect lower prices for milk in 2012

Whatcom County dairy farmers pay close attention to weather forecasts, the cows and the land to determine success, but this year economic factors could weigh more heavily on their minds.

After getting a decent price for milk in 2011, prices are already starting to tick downward while feed and fuel costs remain elevated. That could make profit margins slim in 2012, said Troy Lenssen, who co-owns a Lynden-area dairy with his brother, Terry.

"It looks like the price will be about 10 to 15 percent less this year. It will still be above the historical average, but production costs are running close to double (the average)," Lenssen said.

Despite the challenges in recent years with a fluctuating price, land and water issues, dairy remains a key economic driver in Whatcom County. In November alone, 119 dairy farms in Whatcom County produced 80.9 million pounds of milk, according to the U.S. Department of Agriculture. It's the second highest county total in the Pacific Northwest (Yakima County had the highest total, with 72 farms producing 203.9 million pounds of milk produced in November).

Much of Whatcom County's milk goes to the Darigold facility in Lynden, where it is then converted to powder milk and shipped to food processing facilities nationwide as well as to Asian countries.

Whatcom's production of milk was on par with November 2010, which totaled 80.7 million pounds. It is down significantly from November 2006, when 156 dairy farms produced 89.4 million pounds.

While the weather made things interesting, 2011 turned out to be a decent year for local dairy farmers. The average price paid for Class I (fresh) milk was about $21 per 100 pounds of milk, which was above what's considered the break-even price of $17 or $18 per hundredweight.

A couple of factors ate into that profit margin, however: The rise in fuel and feed prices, as well as less grass cuts in 2011 because of the cold, wet spring. The first cut of grass was several weeks late, leading to less for the cows, although a warm, dry fall may have helped boost production.

For some dairies, less grass means more spending on market feed to make up the difference. According to the USDA, the price of corn, a major feed source for dairy cows, rose more than 60 percent in less than a year. Demand for corn has increased as more of it is used to produce ethanol.

The cold winter blast last month in Whatcom County didn't hurt the grass-growing part of the farm; in fact it might have helped.

"The cold did its job and put the grass to rest for the winter," said Lenssen, noting the cold disrupts bug cycles and also keeps it from growing too early, leading to possible damage by a cold front later in the season.

This spring dairy farmers will be hoping for warmer and drier weather than last year, said Jeff DeJong, who operates a 750-acre farm in the Nooksack Valley area. If the weather conditions are right, the first cut would take place in late April.

As of December the price for Class I milk was $20.37, according to the USDA. Given that milk is a global commodity, quite a few factors influence the price. One reason for the current price drop is that production is increasing overall, said Jason Vander Veen, who co-owns Veen Huizen Farms in Everson with his wife, Debbie.

Big swings in the price of milk make it very difficult for farmers to budget and plan, and that's something local dairy farmers have been dealing with in recent years. In 2008, farmers enjoyed a good year in terms of the price of milk, according to the Washington State Dairy Products Commission, but then 2009 was one of the worst in recent memory as the price collapsed following the national financial meltdown. The past two years have been a period of recovery, as dairy farmers tried to make up for 2009 and put some money away in case another big drop takes place.

A CHANGING LANDSCAPE

Local dairy farmers have had to be mindful of encroaching urban sprawl for many years now, but one other trend is the growth of the berry industry, particularly blueberries and raspberries.

Blueberries are a popular crop in British Columbia, and with the strong Canadian dollar those farmers are looking for available land in Whatcom County to expand.

Raspberry growth is particularly strong in Whatcom County. Last year farmers harvested 66.3 million pounds of raspberries, a 22 percent increase over 2010 and a record for the county.

The 2011 Whatcom County blueberry harvest numbers haven't been released, but in 2010 it's estimated 17 million pounds of blueberries were harvested.

Some of the growth in new berry plants is taking place through the buying of dairy land, but dairy farmers also will lease some of their property.

"I think it's a trend that will continue, especially if the Canadian dollar remains strong," said Jason Vander Veen.

OPTIMISM AMID CHALLENGES

Dairy farmers also are noticing some trends that leave them optimistic about where things are going with the milk industry. As Asian economies continue to grow, demand for Darigold powder milk also will continue to rise.

The rising popularity of buying local is also a positive trend. While the Lynden plant focuses on powder milk, the farmer-owned Darigold company makes a variety of other products in Washington that are sold locally, including fresh milk, yogurt, butter and cottage cheese.

"Darigold is an obvious choice to support local family farms," Lenssen said, noting that more than 100 local farms have a stake in the company. "The dividends returned in June really help out covering planting cost for forages (grass) in the spring."

One other trend taking place is the switch from Holstein to Jersey cows. It's something the Vander Veens did at their farm, because Jersey cows' milk is higher in protein and butterfat, while the cows eat less and there's less manure.

"You get more milk components (protein and butterfat) per acre of land needed to feed them," Jason Vander Veen said.

Dealing with adversity is a way of life for dairy farmers, so these current challenges don't outweigh the positives that come with farming for families like the Vander Veens.

"I'm still positive about the industry; farming is a way of life that I enjoy," Jason Vander Veen said. "There's a routine, but you also know it's going to be different every day. Plus, you get to work outdoors with your family as well as work as a team with other dairies."