Merced County's dairy farmers took a big hit in 2009

Got milk?

Not as much.

Merced County lost 29 dairies in 2009, the most in the state -- an economic downturn that devastated the milk industry.

And the worst may be yet to come.

According to the California Department of Food and Agriculture, 109 dairies in the state closed their milking parlors last year.

"This is just devastating for Merced County," said Michael Marsh, chief executive officer of Western United Dairymen in Modesto. "As dairies go, so go the jobs and the investments."

A total of 56 dairies in the Central Valley closed in 2009 from higher than normal production costs and low returns. The region lost 36 dairies in 2008.

Milk production was down 4.6 percent, and there were 76,000 fewer cows being milked.

There are about 300 dairies in the county.

In a separate report, the U.S. Department of Agriculture said feed costs in the third quarter of 2008, when the bottom started dropping out of the milk industry, made up more than 60 percent of farmers' operating costs.

"The good news is feed costs have come down some," Marsh said. "Corn is going for about $173 a ton right now, and in late 2008 it wasn't uncommon to see it at $325 a ton."

Marsh said it's likely most of the dairies that closed in 2009 in Merced County were smaller dairies, just because the county was home to more small, family-run dairies than huge ones. Some of the lost dairies were on leased property. Marsh said because the farmer had no equity in the land, the dairy farmers couldn't get loans to keep their heads above water.

At one point in 2009, Western United Dairymen figured that a 1,000-cow dairy was losing about $100,000 a month because the price of milk was so low and feed so high.

"Producers just lost their shirts last year," Marsh said. "Hopefully, that will turn around in the second half of this year. Unfortunately, I'm afraid we'll see more dairies go under in the first half of the year."

There's already been a rise in the price paid to producers in the past couple of weeks, Marsh said.

"Milk prices will hopefully be better this year," Marsh said. "We're in a seasonal slump right now between the Super Bowl and Easter, but demand will pick up again."

When milk starts going for ice cream again in the late spring, Marsh said the price should go even higher. New Zealand dairies, which are strong competitors in the world dairy industry, dry up all their cows in their winter, which is our summer. That means no milk at all will be coming from New Zealand during summer months.

The loss of those 29 dairies will make a strong impact on the ag industry in the county. Because of the trickle-down effect, David Robinson said 2009 will probably end up to be a bad year ag-wise for the county.

"Dairy got slapped bad last year, and it will definitely impact our ag worth," Robinson said.

In 2008, milk was worth about $1 billion in the county, one-third of the total ag commodities value. Although Merced County has seen some ag worth records set in the past few years, that won't happen this year.

"We all recognize that last year was an awful year for dairies," said Robinson. "I'm concerned about those dairy families that went out of business. They have gone through terrible times."

And more may be on the way.

Reporter Carol Reiter can be reached at (209) 385-2486 or creiter@mercedsun-star.com.