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Posts tagged as “dairy”

A dairy decline

One of the biggest economic stories in Idaho over the last couple of decades has been the tremendous - you might say wild - growth in dairies, especially megadairies, mostly in the Magic Valley but partly also in southwest Idaho as well. These factory operations have become a key part of the state's economy, even as they present a series of environmental and other issues faster than those issues can be dealt with. Abruptly, dairies became the biggest, most important sector of the Idaho farm economy, accounting for about a third of money produced.

The overall troubled economy, though, has put a pause in the dairy growth, and even in places reversed it.

A new Associated Press piece cites massive cutbacks in some dairy operations, and says one industry figure reports "The dairy drop has cost the state's economy roughly $200 million in taxes and lost revenue since the beginning of the year."

While much of the economy drawdown attention has focused on construction and tech, other sectors are scaling down too, and some of them - like dairy - have about as much impact on the state.

Dairy downer

Jeff Kropf

Barely noticed outside the industry, but of some real import to various places around the Northwest, especially southern and southwest Idaho: Prices for dairy products are dropping, fast.

A notable piece in the Twin Falls Times News said, "Dairy prices are about $7 below the break-even point needed for dairymen to pay operating costs - that means that the industry, in large part, is looking to bank loans to stay in operation. 'This is as bad as we have ever seen it,' said Rick Naerebout, an industry representative with Independent Milk Producers. 'But what makes it worse is the uncertainty that's ahead.' Dairymen across the United States are feeling the pinch as demand for milk and other dairy products decline in both foreign and domestic markets."

More specifically, to take one key example: "Milk prices peaked at $20.25 in June 2008, before dropping to $11.12 - not including protein and other solids. Dairymen need about $13.00 per hundredweight to break even with current feed prices and other operating costs."

Factor that into regional economics, especially considering that dairy has been the biggest ag growth area in the region in recent years.