Louisiana dairy industry struggles

“If I had to buy the farm, I wouldn't be dairying,” Troy Ingram said of his dairy operation near Franklinton, La. The southeastern Louisiana farmer, who's past 50 years old, believes few new farmers will replace him and his contemporaries as they retire from the business.

The push of urbanization is putting the squeeze on Louisiana's dairy industry, experts with the LSU AgCenter say.

“Costs are increasing as the New Orleans metropolitan area expands and people looking for country homes drive up land prices,” said Jeff Gillespie, an associate professor in the LSU AgCenter's Department of Agricultural Economics and Agribusiness.

Gillespie said higher land values mean dairy producers who want to expand can't afford to buy the land they need at a price their businesses can afford.

Ingram, who operates a 250-acre family farm he inherited, generally milks about 60 cows and raises from 32 to 35 replacement heifers each year. He said rising land prices are a concern, but the low price of milk is the major factor in the changing industry.

“The real price farmers have gotten for milk has decreased over time,” Gillespie said. “The actual price hasn't gone up for many years while some input costs have risen.”

Charlie Hutchison, an LSU AgCenter dairy specialist who works with dairy farmers, agrees.

“Prices this year are similar to 1983,” he said, adding, “Folks have been struggling.”

Nationwide, milk production is up about 2.8 percent while consumption is up only 1.8 percent for milk and dairy products National supplies of milk the past two years have put prices at or below the cost of production, said Gary Hay, another LSU AgCenter dairy specialist.

Hay expects to see better milk prices this fall. “That'll help stabilize what's going on,” he said.

Ingram said he's heard predictions that milk prices will rise to the neighborhood of $17 per hundred pounds by October. “(Even) if I see milk at $17 in October, I've still got 90 more days of hard economic times until then,” he said.

Hay said many Louisiana farms produce below the national average per cow — primarily because of less favorable climatic conditions here than in other parts of the country. “Output per cow is not really high, and higher production per cow is needed to expand,” Hay said. In spite of this, more than two dozen producers have gone into the dairy business in the past five years.

New startups and expansion, however, are confounded by rising land costs.

“Land is becoming too expensive to buy for expansion, and leases are uncertain,” Hay said. “Capital in Louisiana is tight.”

Ingram isn't optimistic on the future of dairy farms in Louisiana.

“I see no expansion here,” Ingram said. “I see the industry fading out in the next 10 years. As we keep striving harder to be more efficient, it's more labor intensive. There's not much efficiency left.”

Ingram said he's concerned that the suppliers of specialized dairy equipment and services will soon go out of business if enough dairy farms aren't operating. “Every time someone goes out of business, some of the infrastructure is lost.”

Hutchison said that although the number of farms in the Louisiana's southeastern dairy parishes of Tangipahoa, Washington and St. Helena has decreased, the size of the herds has grown.

“Washington and Tangipahoa parishes are tied to dairying and the industries that revolve around it,” Hutchison said. But as older farmers are downsizing and eventually getting out of the business, some younger farmers are expanding.

With prices currently depressed, producers have to make investment decisions for the long haul, he said.

“This is still a very big milk-producing area,” Hay said. “Washington, Tangipahoa and St. Helena parishes coupled with the neighboring counties in Mississippi are the largest milk-producing area in the Southeast.”

Hay said more than two dozen producers have gone into the dairy business in Louisiana in the past five years.

The Louisiana dairy farms market fluid milk — as opposed to milk for cheese or other products, but the state's consumers buy more than Louisiana dairy farms produce.

Competition comes from other states, including Texas and New Mexico, Hutchison said. Nevertheless, processors prefer local suppliers for quality. So as long as there are local buyers, Louisiana dairy farms will have a market.

In addition to the southeastern Louisiana dairy parishes, DeSoto Parish is a major factor in the state's dairy industry. While 23 parishes reported dairy production in 2002, those parishes — DeSoto, St. Helena, Tangipahoa and Washington — accounted for 90 percent of the milk production and nearly the same percentage of the herds in the state.

The on-farm value of Louisiana-produced milk was $81.2 million in 2002, but when coupled with additional processing in the state, production of that milk meant more than $207 million to the economy.

Rick Bogren writes for the LSU AgCenter.

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