Water issues, struggling dairies cloud California agriculture
Water and dairy are even bigger concerns than usual in California right now.
On the water front, this year has so far been one of the driest, Western Farm Press reports. And without adequate storage to capture excess moisture in years like 2011, water deliveries have fallen dramatically. What's more, the state is dealing with water-related environmental lawsuits, plus the recent release of a study citing groundwater nitrate contamination.
But, the trade publication points out in a story posted today, the dairy industry poses an even more pressing problem:
Cycles are part of agriculture, and CPA Paul Anema of Modesto, Calif., says the Western dairy industry is headed into another down year in what has become a series of three-year cycles of economic pinnacles and troughs.
... if the third down year in the cycle gets too deep, many smaller dairies may not recover as they did after 2009.Those who survived that collapse used profits from 2010 and 2011 to repay debt. Some still have lingering debt from that bad year. There is little equity in many dairies.
Anema says banks and suppliers are not inclined to carry struggling dairymen this time around, as they did in 2009.
“Feed companies have gotten dairies back to 30 days,” and they are not cutting any slack.
There is an old dairy joke that when things get bad, dairymen buy more cows to increase production and hopefully increase income. This time around, Anema says “a lot of his clients” are asking what will happen if they sell the cows and go into tree nut farming.
“The tree nut industry has done well and will continue to do well,” Anema predicts.
Kathleen Masterson explored the plight of the dairy industry nationally in a story for Harvest Public Media last month. Click here to read "Dairy industry pushes for reform," which also connects the dots on the upcoming farm bill debate.
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