Business costs and price regulations are among reasons local dairy farmers aren’t increasing the size of their herds, though yogurt producers in the state continue to report growing demand for milk, two farming sources said Monday.
But another farmer in Delaware County said the boom in the yogurt business overall has been a plus for the dairy industry.
“To see growth in processing is a positive thing,’’ said Barbara Hanselman of South Kortright who with her husband, Ernest, has managed a farm for 30 years. Their three sons, Seth, Kale and Ladd, all in their 20s and college graduates, have returned to the family farm, which has 60 milkers, she said, and a decision about whether to increase the herd will largely be up to them.
“They are our tomorrow,’’ she said. “It’s very exciting for us.’’
Meanwhile, Garret Sitts of Sittsco Holsteins in Franklin said there is no incentive for him to increase his herd of 85 milkers. While Chobani in South Edmeston has had “phenomenal success’’ producing yogurt and growing as a business, he said he is wondering “why am I struggling’’ with bills?
“What’s the incentive to get bigger?’’ he asked.
Sitts isn’t alone.
“Dairy farming is a very tough business,’’ Mariane Kiraly, farm management educator at the Cornell Cooperative Extension Delaware County, said.
Kiraly, who is completing annual dairy summaries, said many farmers are in their 50s and don’t see the point of adding more cows in a very uncertain economic environment. Banks won’t approve loans because of risks involved with milk production unless the farmer has a successor or is in a very good situation, she said.
“New investments to milk more cows involve not only cows, but buildings and milking equipment, more labor, more of everything — and many times more headaches,’’ Kiraly said in an email Monday. “Farmers weigh the risks and rewards accordingly and there aren’t a lot of incentives right now to make big investments.’’
Costs for feed, fuel, labor and machinery have risen significantly while payments received for milk are stagnant, the result of an antiquated pricing system, Kiraly said.
The recently extended Farm Bill “spelled no reforms, just a continuation of the same policies,’’ according to Kiraly. While fluid milk brings the highest price, yogurt is Class II and does not yield as much income to the farmer in this pricing system, she said.
There is no question that New York’s farmers are benefiting from demand by yogurt producers across the state, Steve Ammerman, spokesman for the New York Farm Bureau, a membership lobbying organization. The state’s farmers are up to meeting the yogurt industry’s need for high-quality milk, he said Monday.
However, the costs of feed, fuel, land and other expenses remain challenges for dairy farmers, Ammerman said, and the Farm Bureau continues to promote measures to help farmers, including some pro-dairy funding programs expected in this year’s state budget.
“We’re looking to grow all farms,’’ Ammerman said. There are 5,400 dairy farms statewide, he said.
According to U.S. Department of Agriculture data, in 2012 there were 610,000 milk cows on farms in New York state. The breakdown by county was 13,700 cows in Chenango, 10,300 in Delaware, 11,100 in Otsego and 5,900 in Schoharie County.
Sitts in Delaware County said he has had 85 milkers for about 15 years and to increase the herd would mean a capital investment plus hiring help.
“I’d have to put up a lot of capital to expand,’’ Sitts said. “There’s no financial incentive.’’
Federal and state lawmakers during the past year have been proposing measures, such as tax exemptions and investment incentives, to help dairy farmers. But local dairy farmers don’t need relaxed regulations on herd size or government incentives for methane digesters to handle waste, Sitts said.
“Just pay us,’’ Sitts said.
However, Hanselman said the growth of the yogurt industry and its demand for milk has helped stabilize the industry and added some competition. Though farmers benefit more from selling Class I fluid milk, she said, if the yogurt industry wasn’t buying Class II product, farmers would be paid less based on lower-priced categories.
When there is competition, she said, it’s easier for cooperatives and milk handlers to negotiate for premiums, some of which may reach the farmer.
The main revenue source remains the federal milk pricing system, Hanselman said, and her farm’s current financial status has been enhanced through diversification. The Hanselmans raise some beef cattle and vegetables, and sell some of her baked goods at markets. The farm also raises more than 80 percent of the feed for its herd, she said, and sells some of its crops to other farmers.
Hanselman said the farm also participates in programs that teach how to better manage and utilize homegrown feeds, which can in turn increase cow milk production and efficiencies.
“As dairy farmers, our most important job is to take the very best care of our cattle,’’ she said. “We are their keepers, and in return, they give us our living and way of life.’’