At the Aldi supermarket in Upper Deerfield Township, customers grabbed gallons of milk priced at $2.49 and walked away satisfied.
“I’m always comparing prices, especially these days,” Marvin Kennedy, of Bridgeton, said last week during one of his many bread-and-milk runs.
The cost of the milk for his family is a relative bargain, considering it was averaging nearly $4 per gallon when the recession began in late 2007.
Amid a floundering economy, shoppers have benefited from tumbling food prices. Dairy goods are down 9.5 percent from a year ago.
But for those who produce the milk, the price drop is a test of their resiliency — and tolerance for loss. Dairy farmers are finding their product is worth less and their cows are not fetching what they used to at auction. Some farmers have given up and sent their herds to slaughter.
David Lee, a Salem County-based dairy agent with the Rutgers Cooperative Extension Service, said farmers are awaiting the release this month of federal dollars to help subsidize operations.
“Everybody’s losing money,” Lee said. “Everybody.”
And nowhere is that more evident than in New Jersey’s dwindling dairy belt.
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Not far from Upper Deerfield’s supermarkets and fast-food restaurants is a meager skyline of silos and pockets of farmland. Along a hilly pasture, some of the 80 cows belonging to Hubland Farm in neighboring Hopewell Township can be found grazing or plodding to and from the milking parlor.
John Hubschmidt, a third-generation farmer, took over the 185-acre farm nearly 45 years ago from his parents. He felt a close connection with the cows, milking them, caring for them and ensuring they would breed. The welcome mat to his home asks, “Got Milk?”
The business has had difficult years, for sure, but this latest economic downturn is devastating.
“We’re losing money every day,” Hubschmidt said — about $50,000 over the past year.
While consumers can buy milk by the gallon, dairy farmers are paid for their milk by the hundredweight, or every 100 pounds. A year ago, Hubschmidt said, he earned about $18 per hundredweight from his dairy cooperative, Land O’Lakes, known for its butter and cheese products. Today, Hubschmidt earns about $13.
To break even, he would need to make at least $16.
Earlier this year, farmers on average were being paid as low as $11.30 per hundredweight, and only in the past couple of months has that price turned around.
“We should have retired before,” sighed Martha Hubschmidt, who helps her husband take care of the calves.
Knowing when to sell a farm is sort of like playing the stock market. When milk prices are high, the cows are worth more and a farmer can expect to get the greatest return on his investment.
But farmers missed that opportunity as the economy fell, and now they’re rattled.
“They thought the sky’s the limit,” Martha said. “But the sky came crashing down.”
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The crash in milk prices is simple supply and demand: Too much milk and not enough consumption led prices for farmers to fall more than 40 percent, according to the National Milk Producers Federation, which represents dairy marketing cooperatives.
A decline in sales of butter, ice cream and cheese affected prices. Even the purchase of less pizza hurt the industry, said Bob Cropp, agricultural economist with the University of Wisconsin.
Besides lower domestic sales, other countries began importing less cheese from the United States. The milk supply here was building up, lowering its value.
“There’s been so much financial stress, and farmers have been leaving the business because of it,” Cropp said. “But demand has improved a little bit domestically, and some world exporting could go up (next year).”
The U.S. Department of Agriculture forecasts that milk equivalent exports will be nearly 4 billion pounds this year and increase to 4.3 billion in 2010.
Meanwhile, the number of dairy cows across the country has declined. About 276,000 cows have been killed in the past 18 months under a program through Cooperatives Working Together, or CWT, which pays dairy farmers who want to cull their herds and essentially get out of the business.
A few New Jersey farms have participated, said Jim Tillison, chief operating officer for the Virginia-based CWT.
By “retiring” herds, the CWT says, the decline in the supply of milk has helped to boost prices for farmers — generating a return on investment of $1.54 per hundredweight so far this year.
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The federal government has its own plan for rescuing dairy farmers. A $350 million aid package was signed into law in October, and $290 million of that will be divvied up as direct payment to the farmers — arriving some time before the end of the year, legislators say. The other $60 million will be used by the government to buy cheese and other dairy products for food programs.
The New Jersey Department of Agriculture held a hearing last month with industry stakeholders, and will do so again Dec. 17 to come up with ideas that can help the distressed dairy farmers.
Lee, the Rutgers dairy agent, said the general consensus seems to be “we don’t want to raise the price of milk in the store and we don’t want to have a tax.”
Pennsylvania recently increased the amount dairy farmers must be paid as part of a surcharge that goes beyond the minimum price set by the U.S. Department of Agriculture. That surcharge jumped from 50 cents to $2.65 per hundredweight.
New Jersey agriculture officials could look into a similar increase here.
The state’s commercial dairy industry, however, was on the decline even before the recession. New Jersey had a few hundred dairy farms in the 1970s and ’80s, Lee said, but today, there are fewer than 100.
Why should people even care if the local dairy industry survives? After all, the state’s dairy sector creates just 8 percent of what is consumed in New Jersey, and farmers here produced about 168 million pounds of milk in 2007 — a trickle compared to the billions from California and Pennsylvania.
Maybe so, Lee said, “but people in New Jersey are concerned about development. And when people think of open space, for some reason, they think of cows.”
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“Hey, girls,” said John Hubschmidt, checking on some of his Holsteins on a recent morning, their nostrils and mouths slimy and wet.
There was a time when several dairy farms were spread across Cumberland County, but now there is just him and another family, the Eachuses, in Upper Deerfield.
Glenn Eachus, who has about 170 cows, said business “was horrendous” this year.
“My father did this. I enjoy it,” he said. “But you’d sure like to get paid for it. We owe people money.”
Hubschmidt shares that concern. He is 74, thin, with weathered hands he keeps stuffed in his pants pockets. He figures he could have retired a long time ago, especially since his children have chosen different careers.
On the farm, milking time begins at 4:15 every morning, no excuses. The Hubschmidts have one employee, but finding other, capable help has been difficult.
And so, John and Martha, high school sweethearts, count on one other.
“My farm girl,” he calls her.
“He looked me over the first time and said, ‘She looks like she can work hard,’” Martha said with a laugh.
The second milking of the day was not for a few more hours. The deliveryman who picks up the milk wasn’t coming until tomorrow, anyway. So the couple relished the down time.
For all their difficulties in dairyland, they will keep working.
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