There is silence in the barns of Starvation Ranch.
Dale Kehoe's heart was wrenched when his family auctioned off its entire herd of 160 Holsteins, from the calves to milking cows, last month. He and his son, Eric, had wanted to keep the farm in the family for the next century. They find it eerie to be in barns that once were active with livestock. Now Dale's German Shepherd, Bubba, herds barn cats instead of cows.
Dale Kehoe's heart was wrenched when his family auctioned off its entire herd of 160 Holsteins, from the calves to milking cows, last month. He and his son, Eric, had wanted to keep the farm in the family for the next century. They find it eerie to be in barns that once were active with livestock. Now Dale's German Shepherd, Bubba, herds barn cats instead of cows.
Jason Rearick / The Citizen
Eric Kehoe and his father, Dale, sold their dairy cows last month and are selling the farm that has been in their family for almost 100 years. The family is getting out of the business because of poor economic conditions for the dairy industry.
Eric Kehoe and his father, Dale, sold their dairy cows last month and are selling the farm that has been in their family for almost 100 years. The family is getting out of the business because of poor economic conditions for the dairy industry.
“That's been my whole life from the time I was a little kid, when my mom carried me out to the barn,” Eric said. “I took a lot of pride being able raise up these little baby calves and to be able to produce milk.”
The Starvation Ranch name first was painted on a barn at the farm on Route 41A in Sempronius as a tongue-in-cheek gesture by Dale's father and uncle when their father had gone to town. To the Kehoes' chagrin, a joke of a name has become bitter reality.
The Kehoe ancestors came from Ireland. Three generations ago, Dale's grandfather married a neighbor girl and bought his farm from his father-in-law in 1908. The farm stayed in Kehoe hands for 98 years.
Dale and Eric are dismayed that they're selling the farm when past generations eked out a living on the property even through the Great Depression.
“To the best of my knowledge, cows were milked here, twice a day, every year, for almost 100 years. But we're the ones that have to pull the plug on it,” Dale said.
Their story of hard going is not unique in Cayuga County, especially in the past year.
Dairy farmers, the backbone of the county's rural economy, are
facing a 25-year low in milk prices. The price farmers receive for the unprocessed milk trucked away from their farms has fallen by at least 25 percent since historic highs in mid-2004. New York prices in September were at $12.70 per hundredweight, or pounds of milk. That's down $3.80 per hundredweight from last year, according to the National Agricultural Statistics Service.
At the same time prices began to tumble because of an oversupply of dairy in the country, production prices have skyrocketed. Fuel costs are up substantially, hitting farmers hard because of the amount of fuel they use to grow crops as feed for their herds and run other equipment essential to their operations.
Local farmers have been coping by borrowing against their equity or drawing down their fund balances. They are scrimping on equipment purchases. Some are looking to expand the size of their herds to spread out the costs of labor and machinery among a larger number of animals. Smaller farms have fewer assets to borrow against, which can crimp their ability to weather price slumps.
“This is one of the worst, if not the worst, milk price years ever,” said Dayton Maxwell, an assistant professor in agricultural business at SUNY Cobleskill, one of the state's main agricultural schools.
Farmers expect commodity prices to rise and fall, but when milk prices hit historic highs a couple of years ago, it made the falling price really burn, areas farmers said.
Part of the problem - at least for smaller farmers - is coming because the dairy industry is trending to larger herds to spread out the costs of production. Dairy operations out West are particularly competitive on a larger scale because of the greater availability of land to expand operations.
“This is a tough industry. It's a roller coaster,” Maxwell said.
Fuel, oil and grease (used for equipment) jumped up from $85 per cow to $117 per cow between 2004 and 2005, according to the Dairy Farm Business Survey of 58 farms in western and central New York compiled by Cornell University economics researchers. Total operating expenses hit $3,430, or $14.60 per hundredweight, for each cow, the survey found. Adding in the costs of the depreciation of machinery and real estate and expansion livestock, farmers paid $16.01 of total expenses per hundredweight at the same time the country's average price of milk began to tumble from over $20 per hundredweight.
There is hope in sight because the forecast of dairy market futures indicates milk prices will be higher next year as the supply of milk is expected to drop. But Andrew M. Novakovic, director of Cornell University's program on dairy markets and policy, said even with improvements for the price of milk, it may not be enough to offset other trends.
For farmers who buy corn for their herds, there is no indication that the price of corn is going to fall during the next year because demand for it is tight due to its use in ethanol production, Novakovic said. Feed supply in general is tight because of strange weather patterns in the last three years that have affected the quality of feed.
The nation's housing market is generally declining, and that could mean less demand for dairy products, Novakovic said. Milk won't be eliminated on the average grocery list, but in a tighter housing market people don't go out as much and eat less pizza and cheeseburgers; people don't entertain as much and buy less of expensive cheeses, he said.
Fuel prices have gone down in recent months, but prices in the vicinity of $2 per gallon still are tough for the agricultural bottom line, he said.
“For farmers, it's not just the cost of driving a car into town,” Novakovic said. “It's also the cost of working the fields, running your equipment, heating water to clean milking equipment, pumps you use to pump water. And cows drink a lot of water.”
Ted O'Hara partners with his son, Kelly, in the operation of a herd of 1,600 dairy cows at Oakwood Dairy in Aurelius. O'Hara said they're accustomed to costs increasing 3 to 4 percent every year, and they expand accordingly by 5 to 10 percent to keep up.
But the cost of fuel, chemicals and petroleum-based fertilizer are up 5 to 10 percent from a year ago, O'Hara said. A wet year made it difficult to harvest hay and corn, so more fuel and labor hours were used up with harvesting or repairing of machinery breaking down after being dragged through mud, he said.
“We're actually getting a double whammy with increased costs and the weather,” O'Hara said.
Futures are predicting that milk prices might rise to $14 per hundredweight. That's good news for Oakwood because the farm is able to break even at $13 per hundredweight O'Hara said. The farm has coped with prices below its break-even point by financial jiggering, trying to control production costs and growing the size of its herd. It's a third generation farm that started with two cows in 1941 and has continually grown.
“The only thing we can do is cut costs,” O'Hara said. “That kind of forces us to grow out of necessity rather than if we want to.”
Cayuga County Legislator Ray Lockwood, R-Aurelius, also is a dairyman. His son, Ray Lockwood III, has become the principal operator of the family's 800-acre farm with 350 head.
The oversupply in the diary industry came when milk was at an incredible high and interest rates were at an incredible low, Lockwood said, but farmers are “hard-pressed to find 6 percent money now.”
But with prices predicted to turn, he thinks the best strategy is to expand now while prices are low. He noted his son is currently putting up a new barn to expand his herd.
Farmers must continuously become more and more efficient to be able to make some money at an increasingly tougher business, Lockwood said. Nutritionists are brought in to balance the feed given to a herd to try to get the most milk production from the lactating cows. Tillage of fields is watched to ensure its the most efficient practice. Cows are made comfortable because they produce more.
Farmers have to manage their cost side because they don't have a choice about when to sell and for what price to sell it at, he said.
“Milk is a food item,” Lockwood said. “It's not like a crop producer who can put it in bins until the price goes up. It has to go out of here every day or at least every other day.”
Jim Young, who milks 50 Jerseys on his Fleming Homestead farm, says his farm's gross income was cut by 40 percent between the milk price drop and the cost increase on almost every product input. Capital improvements are on hold with the increase of price in petroleum-based products and with the surcharge levied for Young's milk to be hauled to market. Vacations are on hold because Young had to cut back on hired labor.
As dairy farms have tightened their financial belt, it has wider implications for the county's economy.
“It's the backbone of the local economy,” said Young, who also is the supervisor of the town of Fleming. “It's the largest industry in Cayuga County except for the state system.”
For every $1 generated by a farm, its impact is multiplied to $3 because of the businesses associated with the farming economy, Novakovic said.
Sue Foster, officer manager for Main and Pinckney Equipment Inc., a store that sells farming equipment to mid-size farms, said the business has seen a decline in its sales of tractors, manure spreaders and balers since last year.
“With farmers, it's not like you can say you'll drive less,” Foster said. “They have to plant their crops and they have to take care of their animals. There's nothing they can do other than to cut back on their buying of equipment.”
For the Kehoes, farming as a living has always meant a tight budget. But this might be the worst it's ever been for them.
Typically, the family's wives have had off-farm income to provide health insurance and supplementary income. But Dale's wife, Linda, was laid off last winter during the last year of job cuts at Auburn Memorial Hospital. Dale said he is glad they have their health at a time when they don't have insurance. He said he's at an awkward age where retirement could seem sensible but he's not yet old enough to qualify for most government programs.
The stress of paying bills was released a bit when they sold the cows, Dale said, but they're all unsure of what direction to go in next. He thinks he might consult on other farms. Their farm is for sale, but they will only sell it as a working farm, not for housing development.
Eric, who has two daughters, has worked as a paramedic for the last 10 years to supplement the farm's income. He is working two full-time jobs for the Rural/Metro ambulance service in Auburn and for the Four Town First Aid squad in Moravia. His three brothers followed other career paths.
The Kehoes worked for several months with a Cornell Cooperative Extension program that examines an operation's practices for improvement possibilities. But the major recommendation of expanding the farm's size didn't seem feasible when there is not a lot of land available in their southeastern corner of the county - and they didn't want to relocate.
Dale said they could have kept on “bleeding” for several more years, but it would have required taking out a mortgage when they owned their acreage free and clear and it would have required a significant investment to update barns and milking equipment that are decades old.
“There wasn't a really good, hard solution,” Eric said. “We could get a lot bigger than we wanted to be or get out. My dad is 58-years-old and I don't have any sons coming behind me. Who are you going to give it to when you get done? We were frustrated and we finally made the decision we weren't going to get ahead. We were just going to lose equity.”
Dale thinks the country needs a better farm policy. The United States has thrived on cheap food for decades, but food prices are not keeping pace with the price of energy, insurance and other inputs, he said.
Farms must either become huge or specialize in niche markets like organic products, he said. In the end, it was a lifestyle he loved more than it proved to be a means to make a living.
“We farmed with our hearts instead of our heads,” Dale said.
Staff writer Amaris Elliott-Engel can be reached at 253-5311 ext. 282 or at amaris.elliot-engel@lee.net
The Starvation Ranch name first was painted on a barn at the farm on Route 41A in Sempronius as a tongue-in-cheek gesture by Dale's father and uncle when their father had gone to town. To the Kehoes' chagrin, a joke of a name has become bitter reality.
The Kehoe ancestors came from Ireland. Three generations ago, Dale's grandfather married a neighbor girl and bought his farm from his father-in-law in 1908. The farm stayed in Kehoe hands for 98 years.
Dale and Eric are dismayed that they're selling the farm when past generations eked out a living on the property even through the Great Depression.
“To the best of my knowledge, cows were milked here, twice a day, every year, for almost 100 years. But we're the ones that have to pull the plug on it,” Dale said.
Their story of hard going is not unique in Cayuga County, especially in the past year.
Dairy farmers, the backbone of the county's rural economy, are
facing a 25-year low in milk prices. The price farmers receive for the unprocessed milk trucked away from their farms has fallen by at least 25 percent since historic highs in mid-2004. New York prices in September were at $12.70 per hundredweight, or pounds of milk. That's down $3.80 per hundredweight from last year, according to the National Agricultural Statistics Service.
At the same time prices began to tumble because of an oversupply of dairy in the country, production prices have skyrocketed. Fuel costs are up substantially, hitting farmers hard because of the amount of fuel they use to grow crops as feed for their herds and run other equipment essential to their operations.
Local farmers have been coping by borrowing against their equity or drawing down their fund balances. They are scrimping on equipment purchases. Some are looking to expand the size of their herds to spread out the costs of labor and machinery among a larger number of animals. Smaller farms have fewer assets to borrow against, which can crimp their ability to weather price slumps.
“This is one of the worst, if not the worst, milk price years ever,” said Dayton Maxwell, an assistant professor in agricultural business at SUNY Cobleskill, one of the state's main agricultural schools.
Farmers expect commodity prices to rise and fall, but when milk prices hit historic highs a couple of years ago, it made the falling price really burn, areas farmers said.
Part of the problem - at least for smaller farmers - is coming because the dairy industry is trending to larger herds to spread out the costs of production. Dairy operations out West are particularly competitive on a larger scale because of the greater availability of land to expand operations.
“This is a tough industry. It's a roller coaster,” Maxwell said.
Fuel, oil and grease (used for equipment) jumped up from $85 per cow to $117 per cow between 2004 and 2005, according to the Dairy Farm Business Survey of 58 farms in western and central New York compiled by Cornell University economics researchers. Total operating expenses hit $3,430, or $14.60 per hundredweight, for each cow, the survey found. Adding in the costs of the depreciation of machinery and real estate and expansion livestock, farmers paid $16.01 of total expenses per hundredweight at the same time the country's average price of milk began to tumble from over $20 per hundredweight.
There is hope in sight because the forecast of dairy market futures indicates milk prices will be higher next year as the supply of milk is expected to drop. But Andrew M. Novakovic, director of Cornell University's program on dairy markets and policy, said even with improvements for the price of milk, it may not be enough to offset other trends.
For farmers who buy corn for their herds, there is no indication that the price of corn is going to fall during the next year because demand for it is tight due to its use in ethanol production, Novakovic said. Feed supply in general is tight because of strange weather patterns in the last three years that have affected the quality of feed.
The nation's housing market is generally declining, and that could mean less demand for dairy products, Novakovic said. Milk won't be eliminated on the average grocery list, but in a tighter housing market people don't go out as much and eat less pizza and cheeseburgers; people don't entertain as much and buy less of expensive cheeses, he said.
Fuel prices have gone down in recent months, but prices in the vicinity of $2 per gallon still are tough for the agricultural bottom line, he said.
“For farmers, it's not just the cost of driving a car into town,” Novakovic said. “It's also the cost of working the fields, running your equipment, heating water to clean milking equipment, pumps you use to pump water. And cows drink a lot of water.”
Ted O'Hara partners with his son, Kelly, in the operation of a herd of 1,600 dairy cows at Oakwood Dairy in Aurelius. O'Hara said they're accustomed to costs increasing 3 to 4 percent every year, and they expand accordingly by 5 to 10 percent to keep up.
But the cost of fuel, chemicals and petroleum-based fertilizer are up 5 to 10 percent from a year ago, O'Hara said. A wet year made it difficult to harvest hay and corn, so more fuel and labor hours were used up with harvesting or repairing of machinery breaking down after being dragged through mud, he said.
“We're actually getting a double whammy with increased costs and the weather,” O'Hara said.
Futures are predicting that milk prices might rise to $14 per hundredweight. That's good news for Oakwood because the farm is able to break even at $13 per hundredweight O'Hara said. The farm has coped with prices below its break-even point by financial jiggering, trying to control production costs and growing the size of its herd. It's a third generation farm that started with two cows in 1941 and has continually grown.
“The only thing we can do is cut costs,” O'Hara said. “That kind of forces us to grow out of necessity rather than if we want to.”
Cayuga County Legislator Ray Lockwood, R-Aurelius, also is a dairyman. His son, Ray Lockwood III, has become the principal operator of the family's 800-acre farm with 350 head.
The oversupply in the diary industry came when milk was at an incredible high and interest rates were at an incredible low, Lockwood said, but farmers are “hard-pressed to find 6 percent money now.”
But with prices predicted to turn, he thinks the best strategy is to expand now while prices are low. He noted his son is currently putting up a new barn to expand his herd.
Farmers must continuously become more and more efficient to be able to make some money at an increasingly tougher business, Lockwood said. Nutritionists are brought in to balance the feed given to a herd to try to get the most milk production from the lactating cows. Tillage of fields is watched to ensure its the most efficient practice. Cows are made comfortable because they produce more.
Farmers have to manage their cost side because they don't have a choice about when to sell and for what price to sell it at, he said.
“Milk is a food item,” Lockwood said. “It's not like a crop producer who can put it in bins until the price goes up. It has to go out of here every day or at least every other day.”
Jim Young, who milks 50 Jerseys on his Fleming Homestead farm, says his farm's gross income was cut by 40 percent between the milk price drop and the cost increase on almost every product input. Capital improvements are on hold with the increase of price in petroleum-based products and with the surcharge levied for Young's milk to be hauled to market. Vacations are on hold because Young had to cut back on hired labor.
As dairy farms have tightened their financial belt, it has wider implications for the county's economy.
“It's the backbone of the local economy,” said Young, who also is the supervisor of the town of Fleming. “It's the largest industry in Cayuga County except for the state system.”
For every $1 generated by a farm, its impact is multiplied to $3 because of the businesses associated with the farming economy, Novakovic said.
Sue Foster, officer manager for Main and Pinckney Equipment Inc., a store that sells farming equipment to mid-size farms, said the business has seen a decline in its sales of tractors, manure spreaders and balers since last year.
“With farmers, it's not like you can say you'll drive less,” Foster said. “They have to plant their crops and they have to take care of their animals. There's nothing they can do other than to cut back on their buying of equipment.”
For the Kehoes, farming as a living has always meant a tight budget. But this might be the worst it's ever been for them.
Typically, the family's wives have had off-farm income to provide health insurance and supplementary income. But Dale's wife, Linda, was laid off last winter during the last year of job cuts at Auburn Memorial Hospital. Dale said he is glad they have their health at a time when they don't have insurance. He said he's at an awkward age where retirement could seem sensible but he's not yet old enough to qualify for most government programs.
The stress of paying bills was released a bit when they sold the cows, Dale said, but they're all unsure of what direction to go in next. He thinks he might consult on other farms. Their farm is for sale, but they will only sell it as a working farm, not for housing development.
Eric, who has two daughters, has worked as a paramedic for the last 10 years to supplement the farm's income. He is working two full-time jobs for the Rural/Metro ambulance service in Auburn and for the Four Town First Aid squad in Moravia. His three brothers followed other career paths.
The Kehoes worked for several months with a Cornell Cooperative Extension program that examines an operation's practices for improvement possibilities. But the major recommendation of expanding the farm's size didn't seem feasible when there is not a lot of land available in their southeastern corner of the county - and they didn't want to relocate.
Dale said they could have kept on “bleeding” for several more years, but it would have required taking out a mortgage when they owned their acreage free and clear and it would have required a significant investment to update barns and milking equipment that are decades old.
“There wasn't a really good, hard solution,” Eric said. “We could get a lot bigger than we wanted to be or get out. My dad is 58-years-old and I don't have any sons coming behind me. Who are you going to give it to when you get done? We were frustrated and we finally made the decision we weren't going to get ahead. We were just going to lose equity.”
Dale thinks the country needs a better farm policy. The United States has thrived on cheap food for decades, but food prices are not keeping pace with the price of energy, insurance and other inputs, he said.
Farms must either become huge or specialize in niche markets like organic products, he said. In the end, it was a lifestyle he loved more than it proved to be a means to make a living.
“We farmed with our hearts instead of our heads,” Dale said.
Staff writer Amaris Elliott-Engel can be reached at 253-5311 ext. 282 or at amaris.elliot-engel@lee.net
The Citizens' Say
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Pete Stubben - NYC wrote on Oct 29, 2006 6:39 PM:
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