How volatile prices affect Idaho farms
Idaho farm income fell for a second straight year in 2018 largely due to overproduction by dairy farmers, according to a recent economic report.
The University of Idaho Extension report estimates total net farm income declined 27 percent to $902 million. Total net farm income represents earnings paid to farmers after subtracting expenses.
Farm cash receipts, estimated at about $7.2 billion, were relatively flat, the Idaho State Journal reported . Cash receipts relate to cash income the farm sector receives from commodity sales.
Findings were presented recently to a state legislative committee.
Extension agricultural economist and report co-author Ben Eborn said farm net income also declined about 27 percent in 2017 from the prior year. Farmers are making 40 percent of what they made in 2011, he said.
Cash receipts for the state’s major crops generally increased — including hay, wheat, barley and sugar beets. Receipts for potatoes declined by 4 percent.
But livestock comprise much of Idaho’s farm economy, and dairy farms have struggled. According to the Idaho Dairymen’s Association, 15 Idaho dairies went out of business last year.
Farm expenses also have risen.
Eborn and co-author Garth Taylor calculated that costs were higher for labor, fuel, interest expenses and fertilizer and chemicals.
Eborn said milk prices traditionally have not remained at or below break-even rates for more than a year. But he said milk has now sold for below break-even prices for three straight years.
He said Idaho’s largest dairies have invested too much to scale back when prices decline. Consequently, he said they produce beyond the state’s processing capability.
Alan Andersen, an owner of medium-sized dairies in Declo and American Falls, said with cull cow prices about half the usual rate, dairy producers have avoided slaughtering surplus dairy cows as a way to keep production in check.
To endure tougher times, Andersen has found a niche offering high-end dairy cow genetics to help others’ herds. He said other dairies are making their own cheese or bottling their own milk.
“It’s a real thing that it’s a difficult time, and I don’t see that changing any time soon,” Andersen said.