Here's how the dairy 'crisis' is affecting Centre County

Pennsylvania's dairy farmers are in a "crisis." They're facing low milk prices, and the market is flooded with supply and not enough demand.

In Centre County, 1,192 farms sold almost $91.6 million in products in 2012, according to the Census of Agriculture. Dairy products generated about 47 percent ($42.8 million) of the county's agricultural product sales that year, with $42.8 million.

According to state Senate Majority Leader Jake Corman's office, dairy prices have decreased 40 percent — from about $25 per 100 pounds of milk in 2014 to about $15 now.

According to the Center for Dairy Excellence, Pennsylvania ranks sixth nationally in milk production, and the state's 525,000 cows produce more than 10.8 billion pounds of milk annually. But in 2016, the commonwealth lost 120 dairy farms.

There's an overabundance of milk, both domestically and globally. Not only are farms "incredibly efficient" at producing milk so their "production is outstripping demand," but also in the past decade, especially the past five years, the demand for fluid milk has really decreased, said David Swartz, assistant director of Animal Systems Programs in Penn State Extension.

That surplus is the reason for a sustained period of low prices, which has caused a real issue with profitability for many of the state's dairy farms, he said.

For some farms, there's an opportunity to lower their cost of production, but for others, Swartz said, it's simply not possible to reduce the costs enough to be profitable.

"In a market-based economy, when you're producing a commodity product like milk, it's always the least-cost producer that wins. So the people who innovate and find a way to produce milk at a lower cost are going to be profitable even in these challenging price situations," he said. "Folks who haven't innovated are faced with their higher costs because they're still producing milk the same way they did years ago and as a result, they're more in danger of having to liquidate their dairy operation."

The local impact

Adam and Bethany Coursen own a 280-acre farm in Penns Valley. It's Adam's family farm, and they've been running it for 16 years.

They have about 60 dairy cows, but they've also had to diversify into crop sales and direct marketing of beef and pork.

Three years ago, they remodeled their facility and incorporated a robotic milking system, which is working out better for them and the cows. They no longer need to employ part-time help; they can handle it on their own with the help of their 13-year-old son (and eventually their 10-year-old son, too).

"The cows kind of do the work on their own; it's just a matter of managing," Adam Coursen said.

It's no less work, just different work, said Bethany Coursen, who is also the president of the Centre County Farm Bureau. But, it's exponentially better for the cows that are now able to operate on their own schedule.

The low milk prices have hurt the farm, though.

"Your margins are so, so tight, and any sort of depression in prices is just devastating," Bethany Coursen said.

When operating costs continue to go up, but your paycheck continues to go down, that's obviously a challenge, she said.

The farm bureau is trying to spread the word — "save our local dairy farms" signs dot the sides of the roads throughout Penns Valley and beyond.

"Drink milk. That's what we need," Bethany Coursen said. "The biggest single thing that could benefit us right now is for people to understand milk is healthy, it's quality and that is what will keep us in business."

She continued: "We're inundated with the struggles every day because we're neck deep in it. But what I'm finding is your average person on the street has no idea that we're in the midst of these challenges and that there are a lot of people that might not make it out the other side and those are neighbors and Pennsylvania producers that once they're gone, they will not come back. Once dairy producers go out of business, that's it. It's done."

The uncertain future

Swartz said in the future, Pennsylvania will still have some small dairy herds, but the trend is that herds will become larger.

Probably in the next decade, he said, the state will lose a quarter of its dairy farmers. The farmers who remain will just take on more dairy cows.

There's a lot of stress and pain out there among farmers and their families, Swartz said. (Bethany Coursen said, "Certain co-ops have actually started sending out suicide hotline numbers with their milk checks.")

That needs to be recognized, Swartz said. But he added that the same market-based economy that creates that stress on the dairy industry also allows opportunities for these farmers to find other agricultural commodities to produce.

"Farmers are the ultimate entrepreneurs," Swartz said.

The Wolf administration released a report in January that said two new dairy processing plants in Pennsylvania could "significantly reduce overall supply chain costs, enhance the marginal value of milk for producers and create more than 1,000 jobs, while also adding $1.5 billion in economic activity to the state."

Corman, R-Benner Township, said he is challenging the governor to put together an economic team to make sure the state is attractive to a processing plant to want to locate here.

While it won't solve the larger problem, it'll help, Corman said.

He looks at agriculture as a national security issue — if the United States doesn't have the ability to supply nourishment for its population, then it has to rely on outside sources and put itself in a vulnerable position.

"Because it's such an important item for our society, if the numbers aren't working now, then I think the government does have some role to try to make the numbers better," Corman said.