Dairy farms have been closing across the country and the industry as a whole is struggling. To compete on volume, securing a farm loan can help expand operations and keep your farm competitive. 

The Dairy Crisis Is A Multifaceted Problem

There have been long-standing issues in the industry contributing to the dairy crisis. Many of these issues have made it difficult for dairy farms to operate, causing thousands of farms to go out of business in 2018. Some of the factors causing the dairy crisis include:

  • Milk prices below production costs
  • The growing scale of operations 
  • A shrinking number of dairy processors
  • Falling dairy exports


Milk Prices Below Production Costs

Farmers have been personally subsidizing milk for many years as they are paid less than what it costs them to produce a single gallon of milk. This either comes from their savings or scaling up operations. This is a major factor in many dairy farms filing for bankruptcy.


The Growing Scale Of Operations 

The small traditional dairy farm is a thing of the past. To be profitable, dairy farms need to have a larger and larger herd. This has resulted in mega-dairies with herds of thousands of cows. Family farms achieving this feat is nearly impossible, resulting in smaller farms shutting down.


A Shrinking Number Of Dairy Processors

Consolidating dairy processors reduce a farmer’s ability to negotiate a better rate for their milk. With fewer processors available, farmers are subject to whatever the processor is offering or dump their product.


Falling Dairy Exports

Before 2000, the US was not a major dairy exporter. However, the number of exports of dairy products rapidly rose until 2014. Since then, dairy exports have been on the decline with little indication of a revival.


Avoiding the Crisis

It’s nearly impossible for dairy farmers to not be affected by everything going on in the industry. To stay afloat, farmers must continuously increase their herd size to compete on volume. They can achieve this by using a farm loan to help fund the expansion of their operations.  


Act Today

Keeping your farm running can be difficult during these hard times, but it is possible. You just have to be willing to look for solutions. An AgAmerica loan officer can help you decide which farm loan is right for you. Contact us today to get the process started.