- Associated Press - Friday, January 22, 2016

CALDWELL, Idaho (AP) - The low price of milk last year may have been good for consumers, but it was bad for Idaho dairies’ profits.

Dairy revenue across Idaho has fallen 27 percent, The Idaho Statesman reports (https://bit.ly/1Ugraxb). Experts say if the price of milk could fall another 20 percent from today’s level, possibly pushing dairies into the red.

“We’d be looking at paper-thin margins at best,” said Derek Teunissen, of Beranna Dairy south of Caldwell.

The drop comes after dairy profits in the state reached nearly $2 billion in 2014, just below a record high set in 2013. Both years were bolstered by high milk prices, said Garth Taylor, University of Idaho agriculture economist.

As milk prices plunged in 2015 Idaho’s overall agriculture revenues fell 9 percent. In 2014 milk made up 37 percent of all of Idaho’s agriculture receipts. As revenue dropped in 2015, Idaho’s other crops didn’t grow enough to make up the difference.

Taylor attributes some of the fluctuation to economic and political turmoil oversees. Trade embargoes designed to penalize Russia are causing an oversupply of milk and driving prices down.

For dairy operators, the fluctuating prices mean prosperous years don’t seem as rich. Bernie Teunissen, operating partner of Derek Teunissen, said veterans of the industry expect volatile prices and plan accordingly. He said he bought equipment with 2014’s profits, buying tractors outright so he would not have payments when prices inevitably dropped.

“We invested in the future knowing leaner times will come again,” he said. “The first thing you do in down times is cut back on repairs and maintenance. Instead of an overhaul, you might do a Band-Aid fix to get through the narrow times.”

Idaho is the country’s third-largest milk producer after California and Wisconsin.


Information from: Idaho Statesman, https://www.idahostatesman.com

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