Times are tough for a lot of dairy farmers, as many are struggling with low prices in the industry.
"We're seeing a period that's unlike any I’ve been through,” John Kuegel Jr. said. “And it's just not a healthy situation right now."
Kuegel owns Old Lyddane farms in Owensboro with his father. He says good prices and cheap interest rates over the last few years led to expansion in the dairy farming industry, and ultimately over saturation.
“The bottom of it is there's just too much milk in the supply system,” Kuegel said. “We've overproduced more than what's being consumed, and so now you see that reflection in the price at the store."
With more milk substitutes on the market, Kuegel says people are drinking less of the real stuff. He says exports to other countries have fallen off as well, which is not good for a highly perishable product that needs to be moved every other day.
While a dollar gallon of milk may be a good deal for consumers, it's not so good for people like Kuegel.
"You know we're going into our fourth year off prices that are below the cost of production, and so right now you have a lot of dairies that are going out of business."
The Margin Protection Program for Dairy, which was included in the Budget Bill passed by congress, provides farmers an insurance payment when prices fall to a certain point below the cost of production. Kuegel says this will be helpful to some, but not the fix the industry needs.
"The fault of that is that if the farming community itself won't do anything to curb our production, then that's going to continually keep too much milk on the market, and so it's finding a balance between the farmer being able to make a living, and that consumer having a good affordable product on their shelf,” he said. “Most farmers would prefer not to rely on any government subsidy."
Over the next few years, people like Kuegel will have to make a tough decision whether or not staying in dairy is worth the squeeze.
(This story was originally published on April 8, 2018)
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