As part of our expansion, we want to buy milk from a local dairy farm. That’s not as easy as it sounds. Almost all the farmers in this area contract with the local dairy co-op, and their contract says they can’t sell to anyone else. So even though they’re losing money because the wholesale milk price is so low, they can’t sell to someone else without violating the contract.
They could they leave the co-op, but that’s even riskier. One farmer told me that if he cancels his contract in order to sell to me (or anyone else), and if I stop buying his milk for any reason, the co-op may not take him back. There are no other major milk distributors in the area, so he can’t afford to alienate the co-op. His options are limited: keep doing what he’s doing, or shut down.
Another farm, a somewhat larger CAFO, reportedly loses $66,000 per month at the current wholesale milk prices. But they can’t afford to leave the co-op either, and because they are a large producer, their bankers have given them a significant line of credit. They plan to hold on for better times.
Small farmers aren’t so lucky: bank loans are hard to get. Said one man who recently closed his dairy,
“There used to be 25 dairies in Beaver county. Now there are five.”
Sadly, the family dairy is quickly disappearing.
