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Beef Industry Feels Impact of Low Milk Prices

Dairy farmers are struggling due to the lower prices of milk, so they’re trying to find ways to decrease the milk supply. Some are joining forces to send more of their cows to slaughter. Others are calling upon the government to take some dairy products off the shelves. But while it might cause the dairy industry to rebound sooner, some say it’s having unintended consequences on the beef industry. KSMU’s Jennifer Moore reports.

Eric Ling is a fifth-generation dairy farmer. Today, he’s in the barn checking on the calves which will one day provide the milk that’s poured into cereal bowls and coffee cups across the region.

SOUND: Eric Ling with calves

He just returned to the farm after going off to the University of Missouri in Columbia, where he earned a degree in agriculture business management. One day, he’ll take over the family business, Robthom Farms just outside Springfield, where he helps milk around 160 cows, twice a day.

After checking the calves, Ling heads back to the milking barn, where the milk is already flowing. He knows it’s not the best time to be a dairy farmer.

"I’ve heard of guys, you know, larger dairies that are losing 30 thousand dollars a month. They’re having to make a farm payment, and they’ve got leases on half of their equipment, and it’s just not penciling out at the moment,” he said.

In addition to milk, his farm sells bulls for breeding. But since so many dairy farmers are taking their cows off to be slaughtered, the price of cattle in general is down. His family has had to dip into their savings just to stay afloat, and they consider themselves luckier than most.

“It’s just a matter, right now, of how much equity a dairyman has that they can survive,” says Dave Drennan, executive director of the Missouri Dairy Association.

“A lot of our dairymen have been in the business for a long time, and have saved for their dreams—whether it be a new house, or to bring the next generation home to work in the dairy—and so as we lose our industry, and those folks have to dig into the money they’ve saved for whatever their dream is, I think that’s most heartbreaking,” Drennan says.

He almost tears up talking about the situation, which he says is dire. He’s traveled to Washington, D.C. to meet with every US Representative from the Show-Me state, as well as staff member of Senators Bond and McCaskill.

He’s asking the federal government to take part in a plan called “Meat the Need,” which would use federal stimulus dollars to take dairy products off the shelves and give them to needy Americans. By decreasing the supply, he hopes that demand, and prices, will bounce back sooner.

He also says he believes the state of Missouri should use some of its federal economic stimulus money to help dairy farmers out of the rut they’re in. That, however, will ultimately be up to the state legislature to decide.

“One dairy cow generates almost 14,000 dollars in economic activity. The jobs to be saved are not only the dairy farmer and his family on the farm, but everybody who touches that operation who relies on it for a job,” Drennan says.

Reporter Standup: Right now, I’m taking a stroll around a Springfield grocery store. And from what I’ve seen, it’s easy to spot some of the more obvious signs of the struggling dairy industry: the prices of milk, butter and whipped cream are all significantly cheaper than a year ago. But I’ve just come to the meat section. And according to agriculture experts, a lot of the steaks, roasts and ground beef in Missouri’s grocery stores, much like the ones I’m looking at right now, are actually the meat of dairy cows which have been slaughtered, because their owners couldn’t afford to keep them.

"Certainly the beef price is not very good right now," says Eldon Cole, a regional livestock specialist for the University of Missouri extension office in Mt. Vernon.

He says there’s tension between dairy and beef farmers right now, especially since dairy farmers are sending their milking cows to the salebarn, which is usually dominated by beef cattle. And so, in their effort to reduce the milk supply, Missouri’s dairy farmers are actually increasing the beef supply.

“When you get the hide off of them, and you’re making burger, roasts, steaks or whatever, well beef is beef, and yes, that added dairy beef no doubt has had some influence on the holding down of the beef market,” he said.

On a recent trip to Springfield, Governor Jay Nixon said the state is communicating with dairy farmers to see what it can do to ease their burdens. He would not go so far as to say he supported sending federal stimulus funds their way.

“I mean, there aren’t specific stimulus funds for that need. We have stabilization funds which we’re using to maintain flat funding for many things in our state, be it education or health care, or others. But nothing’s off the table. We’re looking at a wide menu of options for dairy farmers,” Nixon said.

One thing the state is doing, he said, is allowing dairy farmers to take out small business loans with low interest rates.

However, dairy farmers here say the last thing they need is more debt.

For KSMU News, I’m Jennifer Moore.

Janice Ling, owner of Robthom farms in Springfield, says she's been milking cows for over 40 years. (Photo credit: Jennifer Moore) The dairy cows at Robthom Farms are milked twice a day. (Photo credit: Jennifer Moore) Eric Ling, a fifth-generation dairy farmer, says he knows of some Missouri dairy farmers who are losing $30,000 a month. (Photo credit: Jennifer Moore) The cows at Robthom Farms in Springfield are milked twice a day. (Photo credit: Jennifer Moore) The cows at Robthom Farms in Springfield are milked twice a day. (Photo credit: Jennifer Moore) In September, it cost southwest Missouri farmers around 17 dollars to produce one hundred pounds of milk.  The average price they received for that milk was around 13 dollars. (Photo credit: Alex Crowder) Dairy specialists say Missouri farmers are receiving about 50 percent less for their milk than a year ago. (Photo credit: Alex Crowder) The price of milk fluctuates along a simple supply and demand pattern:  dairy farmers are trying to reduce the supply of milk in the hopes that it will cause demand, and prices, to rebound sooner. (Photo credit: Alex Crowder)