The dairy crisis has had a profound impact on the industry as a whole. The industry, once with tens of thousands of dairy farms, now is home to just a few thousand. In 2018, Wisconsin alone saw 700 dairy farms close their barn doors for the last time. As current dairy farmers continue to struggle to stay open, farm loan companies offer many different financing solutions to help.
The Dairy Crisis Has Changed the Industry
The industry has been struggling under the dairy crisis for some time now. As a result, the industry has drastically changed from what it once was. The dairy crisis has lead to:
- Corporatization
- Increased barriers to entry
- Deteriorating quality of life for the animals
- Deteriorating quality of life for the farmers
- A change in the economic landscape
Corporatization
With farmers struggling in the dairy industry for many years, there as been a consolidation throughout the industry. Farms, co-ops, and processors alike have consolidated, resulting in far fewer players in the industry. This has ultimately led to farmers being squeezed as every other part of the industry tries to maximize their profitability, making it difficult for the remaining dairy farms to survive despite the help they were able to get from farm loan companies.
Increased Barriers to Entry
With profitability being linked to volume, dairy farms must keep large herds, sometimes with thousands of cattle. Farm loan companies offer financing to help borrowers afford to grow their operations in this manner. However, it intensifies the barriers to entry for the dairy industry, making it difficult for new farmers to make inroads.
Deteriorating Quality of Life for the Animals
As herd size has grown, the quality of life of the cattle has deteriorated. Cows used to be left to pasture to graze on grass. However, now, with farms becoming more like factories, the amount of available grass is limited. Most of the time, the herd is kept indoors, standing on cement, and fed a special feed to maximize milk production.
A Change In The Economic Landscape
Dairy farms were a vital part of the local economy. Small businesses depended on the injection of cash from the farm. Farmers attempted to keep their farms running with financing from farm loan companies, but eventually they began to close taking other businesses in the area with them.
Deteriorating Quality of Life for the Farmers
As dairy farming operations were scaled up, the impact on the surrounding environment as intensified. Larger herds mean more waste, which intensifies the smell, especially when piped through irrigation lines to fertilize the crop fields. This meant the once peaceful countryside quickly became noisy, smelly, and inundated with flies.
Summary
The impact of the dairy crisis is long-lasting. It’s unlikely that the industry will ever get back to the locally-owned dairy farms that it was once comprised of. However, the effects of the crisis are less than desirable, and farmers must take the initiative to bring back the value of the industry.
Keep the Barn Door Open
Adjusting to these changes in the industry often requires additional capital. Contact an AgAmerica loan officer today to discuss the financing options available from farm loan companies that can help you keep your farm running.