Kentucky dairy farmers adjust to changing industry

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By Collin Overton

In the midst of a market glut in the milk industry, Henry County dairy farmers have had to find other ways to do business.   

Falling prices and increased competition have pushed established farmers out of the industry over the last four years.

Mega retailers like Wal-Mart and Kroger have demanded decreased pricing with each new contract, slashing the revenue each dairy farm earns per gallon and creating a surplus of raw milk.

The Henry County Local spoke with county dairy farmers in April, when many were reeling from recent contract cuts. The Local caught up with two of them this week to find out how they’ve adjusted, and what their plans are going forward. For now, dairy is an unpromising market. 

In 2014, the price for 100 pounds of milk (or roughly 12 gallons) was around $25. Today, farmers earn roughly $13 per 100 pounds, The Daily Item reports. Milk prices are lower than what they were 10 years ago. Couple that with retailers’ attempts to cut out the middle man, and dairy farmers fall further behind.

Wal-Mart is taking dairy production into its own hands this year, opening its own milk processing plant in Fort Wayne, Indiana, and driving prices down further. The plant would source from nearly 30 dairy farms in Indiana and Michigan, with these farms being an average 130 miles from the plant, according to Dairy Herd Management.

Business moves like these have left dairy processor Dean Foods with few options but to cut farmers from their contracts.

On March 2 of this year, the Coombs family learned that Dean Foods would no longer be buying their milk. A letter in the mail told the family, third-generation owners of Jericho Acres Dairy in Smithfield, that their contract would expire on March 31.

“In that moment, I pictured my life without Holstein cows in my front yard, I pictured my boys asking where their cows were going on the day we sold them all, and finally I pictured my husband bawling because his dream was gone forever,” Carilynn Coombs wrote in a post on her blog, “A Modern Milkmaid.”

The Coombs were not alone in getting this news. More than 100 dairy farms in eight states, from Indiana to Pennsylvania, were dropped by Dean Foods. I

n Kentucky alone, 20 farmers have lost their contracts, according to CNBC. Six of those farms have sold out.

The industry is apparently so bad, farmers are committing suicide at alarming rates, according to the Centers for Disease Control and Prevention (CDC). Rates of suicide for farming, fishing and forestry people is 84.5 per 100,000 people, more than five times that of the U.S. population as a whole.

The Coombs have since sold their entire herd of dairy cows, minus a few cows that are yet to calve. As soon as those cows have calves and are ready to produce milk, though, Carilynn Coombs said, they’ll be gone.

Dean has since given the family two extensions on their contract since the letter, with the most recent ending on July 15. For now, though, they’re moving on to other ways to sustain the farm. These days, they’re growing hay and corn, raising beef cattle and looking for any other ways to make revenue.

“There is nothing that we know of for certain right now,” Coombs said. The family will have a better idea of what to do by the fall, she said.

Carilynn and her husband, Curtis, also got into the ag genetics market recently, selling embryos and live animals for breeding. They may turn to growing soybeans as well, in addition to pumpkins. They hope to have pumpkins planted this week, she said.

“These are just all ideas that are floating” Coombs said. “Value added is always something that’s on our minds, whether that be ice cream, yogurt, bottle[ing] our own milk – that’s where we could get back into the dairy game.”

The owners of Taylor Maid, however, are done with the dairy industry. Producers since 1994, David Taylor and his family got the same letter in the mail last March, and the same extensions on their contracts. They stopped producing milk after May 31 and sold the majority of their herd on July 15. Once the rest of their dairy cows calve in, they’ll be sold too.

“It’s just completely turned everything upside down,” owner Mike Taylor said.

Since then, the Taylors have swapped dairy calves for feeder calves. In addition to raising beef, they’re also growing soybeans, corn and hay. Taylor’s sons, Brandon and Matt, planned on working on the farm for as long as they could remember. Now, the two work jobs off the farm to supplement their income; Matt works at the Henry County Animal Clinic, while Brandon works at Southern States in Shelbyville.

“Everything we’ve ever known and ever done, we’ve had to completely change. It’s just a complete lifestyle difference,” Taylor said.

Coombs says she and her husband stay in communication with the Taylors. “They’re up in the air as well as we are, but we talk with them almost every other day to try to work together to figure out what we both are going to be doing,” Coombs said. "Our families are really, really close - our kids go to daycare together.” 

One opportunity for the Coombs slipped away Monday night at the Henry County Board of Adjustment meeting, when Rabbit Hole Distilling pulled its request for a permit to build a warehouse near Smithfield. The family was ready to do business with the distillery, Coombs said.

Strapped for business, they hoped they could be one of the first farms Rabbit Hole would look to buy corn, wheat or rye from, less than a quarter of a mile away. Rabbit Hole founder Kaveh Zamanian said he would buy from local farmers at Monday’s meeting.

“This guy was being very adamant about involving the community in this next step in the business, and I respected that a lot from him,” Coombs said. She said her problem was not that residents had concerns, but the reaction residents showed when Rabbit Hole pulled their application.

“To me, in a small-town community that I’m so proud of, that should have been unacceptable,” Coombs said. “That’s not what it was about. It wasn’t about ‘winning’, it was about doing what was in the best interest of the community, and if doing what was in the best interest was that they didn’t come, I can support that, but not being ugly.”

The family has also expressed interest in working with the Six-Mile Creek Distillery near Defoe, but the distillery hasn’t been as public. They plan on keeping it an open option when the distillery starts production, Coombs said.

Coombs writes about all of this and more on her blog, A Modern Milkmaid. The blog started out as a way for her to share her story, and has since evolved into a marketing firm that helps agriculture-based businesses reach consumers.

Coombs offers photography and digital consulting, as well as “legacy sessions” where she documents a day in a farm family’s life in photos. The firm is a way to both help farmers and earn money for her family, Coombs said. In her writings and other work, she hopes she also helps people better understand how the industry works.

“I still think that there’s this huge misperception as to how the dairy industry works, but it’s a work in progress,” Coombs said. “I would like to think I’m doing a good job of it, but there’s still a ton of work to be done.”