Ag hit hard in 2015 by lower milk, almond prices

Agricultural commodities in Merced County grossed nearly 19 percent less in 2015 than in the previous year due to drought and low prices for milk and almonds, the county’s newly published crop report shows.

In total, Merced County grossed more than $3.5 billion in agriculture, according to the report, published last week.

Milk and almonds remained the county’s top commodities at No. 1 and No. 2, respectively. Chickens surpassed cattle and calves for the No. 3 spot; cattle and calves fell to No. 4; and sweet potatoes remained at No. 5. Turkeys jumped three spots to No. 10, a 17 percent increase from 2014.

In 2015, Merced County was the No. 2 dairy-producing county, making more than 15 percent of the state’s milk, according to the California Department of Food and Agriculture.

Milk production increased, but value plummeted from about $1.4 billion in 2014 to $895 million in 2015. The 2015 milk price was the lowest in five years, the report noted.

Annie AcMoody, director of economic analysis for Western United Dairymen, said milk prices continued to fall another $1 per hundredweight in 2016, resulting in dairymen leaving the business altogether.

“With milk production down year-to-year, the dairy industry is shrinking,” she said.

From 2008 to 2015, 71 dairies closed or left the county, a 24 percent decline. That rate is slightly higher than the statewide rate, AcMoody said.

To counter low milk prices, dairies can change their feed ration, which lowers milk production. Some dairymen use risk management tools such as hedging as a longterm strategy.

“It’s a tough balance,” AcMoody said. “There’s no easy answer.”

Paula Floriano, a longtime dairy farmer in Merced County, says she’s cutting back on her small dairy as much as possible. It costs more to get milk to the creamery, and California dairies are competing with out-of-state milk, she said.

When dairy farmers struggle, so do feed suppliers, Floriano said.

“It’s a trickle-down effect,” she said. “When we hurt, everybody hurts. Dairies are either going out or going under.”

The value of almonds also was down, at $552 million compared with $790 million in 2014.

Another contributing factor to Merced County agriculture was water availability, the crop report said. The 2014-15 water year still was less than average, though more than than the year prior.

This story was originally published October 11, 2016 at 4:48 PM with the headline "Ag hit hard in 2015 by lower milk, almond prices."