Tue, Sep 2, 2014 21:09
HomeMost Recent NewsLone Star Business BlogContact Us
Advertise with Texas Business
Texas Dairy Industry Disappearing
Texas Dairy Industry Disappearing | Dairy, dairy business, dairy economics, abil_txbz, amar_txbz. aust_txbz, beau_pta_txbz, brn_har_txbz, colsta_bry_txbz, corp_chr_txbz,  dal_ftw_txbz, elp_txbz, hou_txbz, kil_tem_fth_txbz, lar_txbz, lngv_txbz, lub_txbz, mca_edi_miss_txbz, mid_txbz, odes_txbz, sanang_txbz, sanant_txbz, shrm_den_txbz,  txrkn_txbz, tyl_txbz, vic_txbz, wac_txbz, wicfal_txbz, Rachel Stobaugh,

Dairy Cattle. Photo by Rachel Stobaugh. Copyright 2010.

Life on a dairy is much different than the rest of the world. It’s a realm of its own: feeding baby calves their milk bottles, trying to sleep while the cowing are conversing, and watching out the bedroom window as the cows munch the crisp, green grass. It’s an unforgettable experience that few children have the opportunity to enjoy.

The dairy industry is disappearing in both Central Texas, and throughout much of the state, according to Mark Jackson, 47, currently the only dairyman left in Waco, Texas. However, according to Jackson, the Texas Panhandle is thriving in the dairy business, and mega-dairies are to blame. Mega-dairies consist of thousands of milk cows, producing more than 100 pounds of milk per day. These mega-dairies find technology the best component in a profitable dairy market – technology that has driven many small dairies out of business.

“Change,” Jackson said. Change is the number one reason why the dairy industry has gone from thriving to dormant in one decade. Herd growth has a huge effect on the steady decrease in the number of dairies. “There were 3,300 dairies in Texas in 1993, and there are 532 now,” Jackson said. “And in five years, we’ll see about a 40 percent decrease.”

Jackson’s dairy houses about 350 milk cows, while both of his brothers each dairy twice as many. He’s considered small when compared to the mega-dairies, but about 140 of those 532 dairymen have 100 milk cows or less, according to Jackson. These dairymen won’t last long in the present-day economy. “If you don’t produce enough, then it’s not worth the drive for the milk truck to come pick up the milk,” Jackson said. “They’d rather pick up 100 pounds of milk rather than 40 or 50.”

Along with the commitment to more money invested in more cows with more time spent milking them, is the age of the dairyman. An older dairyman isn’t interested on growing, he’s interested in maintaining. “The age of the average dairyman now is about 64,” Jackson said. “And the younger generations usually don’t take over.”

What’s happened to the rest? “Many are retiring or going broke,” Jackson said. Size is everything, when discussing profits in the dairy industry – the bigger the better. “If you’re going to stay alive in this business, you’ll need at least 300 milk cows,” Jackson said. There must enough cows to have a productive, cash-flow environment. Labor profit is especially difficult in the dairy industry.

“In 2009, the more cows you had, the more you lost,” Jackson said. “It was the worst year in 40 years.” Fortunately, Jackson had other means of breaking even in 2009. With some farming on the side, Jackson was able to use crops to feed his cattle, rather than buying feed.

Management is key to operating a dairy, because it’s not always managing profits. “People borrow millions of dollars to go into the dairy business, and I don’t know that it’s the place to go, borrowing money like that,” Jackson said.

“It’s a risky business,” Jackson said. With cow-per-dairy numbers steadily increasing, and the number of dairies throughout Texas diminishing, it’s more risky than ever before. Investing endless amounts of money into cattle that will hopefully break even, and sometimes profit, it’s hard to enjoy a job that causes so many sleepless nights and stomach ulcers.

“2011 predictions for the [dairy] market say that the first nine months won’t profit,” Jackson said. The present generation won’t go to college and invest in an occupation that won’t profit, and actually base their choice of major on the contrary. Many students pick their majors with money in mind, Jackson said, which is why agriculture is rarely found at universities. As my father, who was a dairyman for twenty years, told me, “There’s no college for dairying.”

Jackson planned his dairy with a 20-year goal. Dairy for 20 years, sell the dairy, and go on with life. Jackson plans to continue the family wheat-straw and real estate businesses and start living more. Some dairymen, however, don’t meet their goals in the dairy business. When profits turned to deficits, the dairy loses its value and many are forced to sell out at big losses.

The value is lost because of a surplus of supply with a decrease in demand in the United States, according to Jackson. The mega-dairies in the panhandle produce mass amounts of milk, while the smaller family owned and operated dairies can’t possibly match up. “People don’t see chicken, turkey or pig farmers,” Jackson said. “They’ve gone to the corporate level – you see Pilgrims [Pride] and Cargill.”

About 60 percent of milk in Texas is produced in the Panhandle by about 30 dairymen, housing several of the largest mega-dairies in the state, according to Jackson. “Eight of the top 10 dairy counties are in the Panhandle, and they average five dairymen per county,” Jackson said. These are corporate, multi-million dollar dairies, housing 4,000 or more milk cows. When dairies reach the corporate level, there will be more restrictions and regulations put in place. When it reaches that level, “if you don’t produce enough milk, you’re out,” Jackson said.

Along with big corporate visions for the dairy industry, milk prices offer no sense of security either. According to McGregor resident Craig Miller, son of dairyman Billy Miller, milk prices haven’t changed in thirty years, but everything else has. While feed prices, liability insurance, fuel cost and electricity have steadily increased, milk prices remain stagnant. “Milk is currently valued at about 18 dollars per hundred-weight,” Miller said. “It was selling for 17 dollars per hundred-weight in 1970.” Furthermore, the futures market predicts that milk prices will drop to about 14 dollars per hundred-weight this January, according to Miller.

“Dairymen aren’t getting compensated for their work,” Miller said. Part of the problem is that the primary milk sold in stores is 2% milk fat, while the milk sold at dairies are about 4% milk fat. “They’re taking the milk from the dairies, and for every gallon of milk they buy from us, they make two gallons of store-milk,” Miller said. The stores sell the milk for $3.50 a gallon, and that makes milk worth about $40 per hundred weight. Milk trucks under the banner of companies such as Dairy Farmers of America, Select or Lone Star will buy the milk from the dairies for about $18 per hundred weight, according to Miller.

Mark Jackson speaks for most of the dairymen still in the business. “I’m not going to go broke – I’m too good of a businessman,” Jackson said. “If it doesn’t cash flow, I won’t lose too much before I cut my losses and move on.”