Magic Valley dairy industry challenges not confined to Idaho

TWIN FALLS, Idaho (KMVT/KSVT) A University of Idaho Extension report says Idaho farmers are making about 40 percent of the income they did in 2011, in part due to the overproduction of dairy products by Idaho producers.

CEO of the Idaho Dairymen Association, Rick Naerebout, says recent economic conditions have made it where dairymen are forced to risk their equity in order to continue competing in the marketplace.

"We're seeing an extended period of time where we've had the price of milk below the cost of production, and that requires our dairymen to dig into their equity to be able to continue operation."

General Manager of Magic Valley Quality Milk Producers Alan Stutzman says it's not just Idaho that's seeing this type of effect in relation to dairy products.

"The all-milk price in the United States is down compared to previous year. That all has a lot to do with it," Stutzman said.

Naerebout agrees what's happening is not solely confined to Twin Falls, better yet Idaho.

"We're in a world market and there's been an overproduction of milk," Naerebout said. "Not just here in the Magic Valley, but worldwide."

Despite the current trend, both see bright spots on the horizon.

"Sometimes it's hard to see the positive of our industry. It's hard for dairymen to get up everyday knowing that regardless what they do to improve management on their dairy, they're still going lose money," Naerebout said. "But overall the outlook is positive."

Stutzman agrees that the outlook is positive and says what's going right and what needs to change.

"What we need as industry is cheese prices to rise, we need non-fat dry milk prices to rise, and butter prices to rise," Stutzman said. "One fortunate thing for the dairy industry is the butter price has remained strong for a number of years and it looks to remain that way."

And despite that, not all of Idaho agriculture is experiencing a downturn. In fact, Idaho hop production has reached a record number, and the Gem-State is now the second largest producer of hops among states in the country.

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