May milk checks for some Idaho dairy producers were as low as $8.39 per hundredweight, lower than even during the 2009 downturn, Rick Naerebout, CEO of the association, said.
At the high end, milk checks were in the mid $13s. That was a huge range of payments compared to normal, he said. It depended on which companies were struggling from lost sales and put in the position of having to dump milk, he said.
There were long stretches of dumping 50,000 to 75,000 pounds a day. At the low end, 15 million pounds of milk were dumped in April. At the high end, 25 million to 30 million pounds were dumped, he said.
“That cost is borne by the dairymen,” he said.
The dumping IDA has been able to confirm was by producer cooperatives. Dairymen are still paid, but the cost is spread across the cooperative, he said.
“So everybody’s price is lower,” he said.
Processors such as Glanbia or Jerome Cheese have a direct relationship with individual dairymen, but they top off their plants’ needs with milk from cooperatives, he said.
“Co-ops are burdened with balancing the market,” he said.
When processors lost cheese demand, they backed off the amount of milk they bought from cooperatives, he said.
“We saw that across the country,” he said.
Dumping hasn’t happened in a couple of weeks but did continue well into May, he said.
“Right now the stress is acute,” he said.
Milk prices in the ballpark of $8 only cover the cost of feed, he said. The overall cost of production is about $16 a hundredweight in Idaho. Even the highest price of $13 is $3 short of covering cost. That’s a big number, and producers have to dig into equity to pay bills, he said.
Dairymen have gotten robust support from the government, and a big portion of that void is being filled, he said.
“But they’re still losing a significant amount of money,” he said.
Near Buhl, Idaho, dairyman and IDA President Pete Wiersma said the only issue he’s dealing with is low prices. He hasn’t had to dump milk, and his workers are healthy.
Prices have recovered a little on the futures market, but his milk price was $10.80 on the last milk check, about $6 or $7 below breakeven, he said.
“Most of us are more or less in the same boat,” he said.
The situation was no surprise, given restaurants, schools and other establishments were shut down, he said.
“That whole market threw everything out of whack. Cheese processors can’t just snap their fingers and switch to (bottling) milk,” he said.
But he’s optimistic. The economy is starting to open up, things are starting to move and the demand is there — although schools are out for the summer.
And optimism is showing up in the futures markets, he said.
“Any gaps that will be there will get filled pretty quickly, barring nothing health-wise rears its ugly head,” he said.