Herd slaughter a reality for US farmers

Dino Giacomazzi, whose great-grandfather started the Giacomazzi Dairy farm in Hanford, California, in 1893, said he had no choice in February but to slaughter 100 cows, or 11% of his herd reports The NZ Herald. Rising feed prices and a world surplus meant it cost as much as US$17 ($26.62) to produce US$10 of milk. "Producers are in an absolute state of panic," said Giacomazzi, 40. "To spend 100 years building a dairy business and see much of that equity disappear in a year is very troubling." Farmers plan to shift the pain to consumers. The National Milk Producers Federation in Arlington, Virginia, will pay dairy farms to slaughter 103,000 United States cows in coming months. Milk futures prices will double next year to a record US$23 per 43.5kg as the national herd shrinks by 171,000 head, the most since 1989, says Michael Swanson, a senior economist at Wells Fargo, the largest lender to US farmers. The cuts will lead to the first two-year drop in output in four decades and higher prices next year for butter, cheese, milk and the non-fat dry powder that's a benchmark for global exports, according to US Department of Agriculture forecasts. "We could easily see US$20 milk again next year," said Richard Bradfield, a vice-president of the dairy business at International Ingredient, a manufacturer of specialty feed products in Fenton, Missouri. "The longer these low prices last, the greater the potential for a big spike up in prices as dairies make larger cuts." Farmers are culling herds because exports plunged 26 per cent in the first four months of the year, supplies rose and the cost of corn, the primary feed ingredient, averaged almost US$4 a bushel. "No one is making money producing milk," Wells Fargo's Swanson said by telephone from Minneapolis. "The milk price remains well below the total cost of production. ."