Dairy farmers look to borrow money to make it in this economy

One dairy farmer’s struggle

(Photo from jemappellealicia, Flickr.com)

Patty Beyer, partner in Moserdale Dairy Company, said, “When you can’t pay the bills, you have to borrow money and you can’t see the light at the end of the tunnel. There is a lot of emotional stress.” Beyer owns a dairy farm in Copenhagen, New York that milks 350 cows daily, but can’t meet its expenses. In today’s market, milk is selling for less than it costs and many dairy farmers are finding their businesses and lives in peril. Beyer added, “There is a whole bunch of other things that go with [running a dairy farm] aside from just milking cows.”

Beyer is just one of the numerous dairy farmers turning to agricultural help lines. FarmNet is an Ithaca-based not-for-profit organization that has been fielding calls from dairy farmers. The agency offers free financial consulting to farmers in the state. Throughout 2009, FarmNet saw a 50% increase in requests for assistance. The growing demand shows the state of the dairy industry and how difficult the market has become as a result of the recession. There are not many options for farmers who have spent their entire lives building up their businesses only to have the market render them helpless.

The financial state of the dairy industry

Many farmers have cited their problems are hard-hitting and solutions are sparse. Lines of credit are maxed-out, equipment is being repossessed, and land is losing value. Just like property in the real estate market, farm land is worth less than its mortgage value. Complicating the issue even more is the decline of cattle value. Many dairy farmers ended up sending cattle to slaughter to cut down on food requirements and to raise capital.

The dairy industry was doing very well a few short years ago. Increased production in the good times was used to meet high export demand for dairy. Unfortunately, the demand fell sharply once the recession began and farmers were left with too much milk in storage. The abundance of dairy caused the price to collapse. FarmNet’s Executive Director Ed Staehr said, “Dairy farmers are in a difficult position. They can’t afford costs and they can’t borrow money due to their finances. Expenses are the same, but revenue is gone.”

Help is available

Due to the problems in the economy, there are agencies that specifically target agricultural companies with problems. FarmNet is one company that is a consulting firm for farmers in upper New York. The agency is funded by New York’s Department of Agriculture and Markets and by private grants. The company strives to serve any farmer or company in the field of agriculture. There are over 50 consultants employed at the company and they each have a specialty. So far this year the agency has aided over 6,000 farmers with personal and financial problems.

Another company that focuses on helping farmers is Sowing the Seeds of Hope. This agency is a behavioral health network that aids Iowa, Minnesota, Nebraska, Kansas, North and South Dakota, and Wisconsin. By the end of 2009, the agency expects to field over 27,000 calls from farmers in trouble. This organization helps farmers financially, but also helps them with stresses that arise from a challenging business environment.

The future of dairy farming

Overall, dairy farming is in a difficult position, but help is available. Organizations like FarmNet and Sowing the Seeds of Hope both strive to bring farmers hope that the future will sort itself out. For example, FarmNet offers consultants who are able to dialogue with lenders and creditors. They can suggest cash-flow plans, offer up solutions to loan repayment, and find farmers additional ways to borrow money if possible. The services they offer are invaluable to worried farmers. The consultants often visit farms and offer specific suggestions on what solutions are available. Staehr said, “It’s my job to try to find out what [farmers] can do to hang on until things improve.”

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