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Annual Agriculture Issue

In the rolling hills of northern Kentucky, Eddie Gibson spends his days tending his cattle and coping with the challenges of being a small dairy producer.

Hundreds of miles away in the flat grain fields of south-central Kentucky, Lee Robey faces the challenges of a large milk producer.

The two men have dramatically different operations, yet see the state’s dairy industry through similar looking glasses. Neither wants to do anything else and both see positive aspects of being in a business that requires a strong commitment.

Because a large portion of the U.S. population is near Kentucky, there is a big demand for milk, Gibson says. “So this isn’t a bad place to be a dairy farmer. I don’t see the industry dwindling away to nothing.”

But Kentucky has seen the number of dairy farms drop from more than 3,000 in 1994 to 1,418 in 2004. That reflects a national trend of fewer dairies with more cows, says Bill Crist, a dairy specialist with the University of Kentucky College of Agriculture.

“Consolidation is happening across the United States, and Kentucky is about average in the number of dairy farms that have stopped production,” he says. “A number of these changes are happening as farmers reach retirement age.”

But retirement is not the only reason some opt out.

“Around here, there are too many other easier jobs,” says Gibson. “Almost all the farmers I know that were milking under 100 cows have quit and are doing something else. I knew a lot of guys my age when I first started milking cows, but there’s almost nobody left now.”

When dairy marketing specialist Eunice Schlappi began working for the Kentucky Department of Agriculture, she kept hearing that the industry is dying. But she disagrees. While dairy farms are declining, the average number of cows on dairies is increasing. Today, the average is 75 cows per herd compared with 50 only a few years ago. Kentucky production per cow is also increasing, averaging 14,000 pounds of milk per cow annually, compared with 12,000 pounds four years ago.

“It’s not a dying industry, it is a changing industry, and it will be for several years,” she says.

Gibson, who milks twice a day and runs his 45-cow herd with help from his father and a neighbor, but without any hired labor, isn’t looking to get out of the business. He’s looking to build new facilities closer to his farm and home. The operation is now on his father’s farm, and his plans include a robotic system that will allow him to expand production by about a third and make it a little easier on him.

With a degree in agriculture education, Gibson initially thought about teaching, but the dairy is where he really wanted to be, so he came back to the farm where he raises some forages, corn, and tobacco.

“I’ll stay in it until I croak, I guess, if I’m able,” he says. “I know how to milk a cow and I like doing it. I’m not hung up on making a lot of money, as long as I can pay my bills and have a little bit.”

Lee Robey’s farm in Logan County reflects the national trend. The dairy, which was started by his grandfather, has grown from about 70 cows in the 1970s to nearly 1,000 in 2004. In addition, his family grows tobacco, grain, and forages. In 2003, they completed construction of new dairy facilities and operate nearly 24 hours a day, milking three times a day. Today, Lee and wife, Denise, and their sons, Chris and Adam, all work full time on the farm. A third son, Eli, attends college and may return to the farm after graduation. They also have a hired labor force.

“I think the numbers will eventually balance out,” Robey says. “It’s not only happening with dairy, it’s happening in the swine industry, there are fewer tobacco farmers, and fewer grain farms.”

While consolidation is under way, there is room for more dairies in Kentucky and the southeast, Crist says. The demand for dairy products is strong. It takes almost 600 pounds to supply all the milk and dairy products for one person annually. The area is considered to be a milk-deficit area because it does not produce all the milk and dairy products needed to meet consumer demand within the area.

In addition, Kentucky has a strong forage base and a good environment except for the summer heat. But that can be dealt with through good nutrition programs and sprinklers and fans to keep the animals comfortable, he says.

Despite demand, dairy farmers face uncertain pricing. In the past five years, tremendous price swings have occurred in the industry, says Jack McAllister, UK dairy specialist. Until prices improved this past spring, farmers had been dealing with a three-year trough of low prices—some of the lowest in 25 years, he says.

“You know the ebbs and flows are going to be there, so you try to prepare yourself for them by paying down debt when you can,” Gibson says. “You don’t buy equipment and spend money when you don’t have to.”

McAllister says the best managers are those who can show a profit when they hit the low prices as well as when prices are high. To do that, management of their resources, including costs of feed, labor, and equipment, is the key.

“We are very conscious of milk marketing and don’t understand why things are happening in the dairy industry from time to time, but we don’t get bogged down with it. We are committed, we have to make it work and ride the highs and lows out. You be efficient as you can,” Robey says. “You put your energy into things you can control, which is good herd health and a good forage program—the things you can do to produce milk as cheaply as you can, then you have to weather the storm.

“The thing that really concerns me is that the spread between what consumers pay and what the farmer receives continues to grow,” he says.

The farm price for milk as a percentage of the retail price for dairy products (including milk, ice cream, cheese, and butter) was 52 percent in 1980 but declined to 28 percent in 2002.

Some dairies consider adding other dairy products to their raw milk production to capture more of those retail dollars. A few dairies in the state are beginning to make their own cheese and ice cream, and the potential is there to successfully add these enterprises, McAllister says. Other dairy operators are looking at specialization, such as raising replacement heifers for other dairies or doing only the milking while letting someone else raise the feed.

Robey says a well-managed dairy farm isn’t much different from any other business.

“It takes committed people with good resources,” he says. “People that are successful in industry often have seven-day-week responsibilities as well.”

The dairy industry can be considered confining and burdensome with its daily demands, or you can make it more pleasurable and enjoy it, says Robey.

“Our total family is involved,” he says. “It is a pleasure for me to work with my sons. They challenge me to do a better job and I challenge them. The key to a successful dairy is to have a very committed family that will stand beside you and work with you. You’ve got to be a veterinarian, a nutritionist, and a banker, and you’ve got to wear all those hats and know when to call in the real experts. You have to seek out good advice and be able to turn down bad advice.”

The dairy industry has its good times and bad, Gibson says.

“I can’t help but think there’s a better future down the road for all farmers, because sooner or later food is going to get harder to come by and we’ll make more money,” he says. “One thing with dairying, there’s no end to the stuff you can do to continue improving. So if you are looking for work, there’s always something to do that’s not just busy work.”

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