SFGate: California Expected to Lose 100 Dairy Farms

October 15, 2012

The nation's drought and high corn prices are devastating California's $8 billion dairy industry to the point where farmers can't afford to feed their cows – and their professional trade organization has been regularly referring despondent dairymen to suicide hotlines.

Experts in the industry estimate that by year's end California, the largest dairy state in the nation, will have lost more than 100 dairies to bankruptcies, foreclosures and sales. Milk cows are being slaughtered at the fastest rate in more than 25 years because farmers need to save on corn costs. According to the Western United Dairymen, a California trade group, three dairy farmers have committed suicide since 2009, despairing over losing their family's dairies.

“I've never seen it as dire as it is now,” said Frank Mendonsa, a Tulare dairyman who serves on the Western United Dairymen board. “Pride is just eating these guys up. People are calling me and asking me what to do. It becomes like a counseling session to stop people from hurting themselves. But it's not just losing our jobs that is driving the desperation. We're losing our houses, in some cases the same houses that our grandparents lived in, and we're losing our entire identities.”

The problems started in 2009, when milk prices bottomed out and grain prices soared, partly due to the government's ethanol mandate. Congress is requiring that gasoline producers blend 15 billion gallons of ethanol, made from corn, into the nation's gas supply by 2015. Dairy farmers were forced to borrow against their land and cows to make their bills.

Then, this year, the worst drought in half a century struck in the Midwest, and corn prices tipped the scale at more than $300 a ton. Historically, the price for corn has averaged $130 a ton. Even though milk prices have slowly come up – in November, it will be at a near record high of $23.17 for 100 pounds of fluid milk – farmers are barely breaking even because of grain and hay costs. Experts predict that consumers will start seeing a price increase for dairy products at the cash register starting in November.

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