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Veteran Advisor

From the parlor pit 10-20

 

Just the facts this morning.

 

Yesterday Class three milk closed at 15.48 this was down from the high of 16.15 posted back on 10-12.

 

Also yesterday was Fonterras bi monthly auction in which we moved lowere an average of 2.5% on milk products.  Milk powder fell to a two month low.

 

We are starting to see more forced auctions of big dairies as banks decide to trim losses now.  Here is a sad story from California.  My heart goes out to the children in this family.

 

Gotta go and rip ground as the sun is finally coming up. BYW I really hate this extended Daylight savings time.  I get done with chores about 6:30 and I can't see my hand in front of my face till about 7 really sucks! JR

 

An auction is set for November 17 to sell off 7500 milking cows from the Artesia Dairy southeast of Corcoran. The auction at Overland Stockyards in Hanford also includes rolling stock from the dairy owned by Hans Reitsma - a Dutch immigrant who died at his own hand in late 2008.

 

Reitsma’s death caused a stir in the close knit central California dairy industry in part  because Hans left behind a widow and seven young children.

 

Family-owned dairy farmers- many with Dutch or Portuguese heritage - shared their neighbor’s pain also because the disastrous and sudden downturn in milk prices called into question all of their survival.

 

The collapse in dairy prices in 2008 came just as a global financial crisis affected banks.

 

Like Reitsma most dairymen had borrowed millions to finance their operations and word spread that Reitsma had been pressured by his bank to sell the operation he had built up so successfully over the years. He reportedly left behind two suicide notes - one for his family and another for his banker say several news accounts.

 

Reitsma’s widow Roxanne -raised from a large Portuguese immigrant family- bravely tried to run the 2330 acre farm on Highway 43 at Rd 136 by herself for months. But then this sad saga got sadder.

 

A Tulare County court this spring authorized the dairy be placed in receivership after the lender claimed the operation continued to lose value.

 

The receiver - a kind of court-appointed trustee has been operating the 7500 head dairy since then says Gary Honeycutt who manages the dairy for the receiver JVan Curen.

WARN Notice

 

In recent weeks the receiver has posted a state WARN notice that the 70 workers at the big Tulare County ranch will be laid off as of November 28. A WARN notice requires employers to give affected employees and other state and local representatives notice 60 days in advance of a plant closing or mass layoff. It triggers help for the affected employees.

 

The action to sell off the cows is needed to protect the asset says Honeycutt. “The collateral here at the Artesia Dairy has been deteriorating” figures Honeycutt . The sale  will not affect a future sale of the property and homestead itself. Honeycutt says the property sale is being handled by area realtors Schuil & Associates but that no sale on the property is pending.

 

Roxanne and the children no longer live on the ranch having moved this summer.

 

Today,Roxanne focuses on her children and asks not to be quoted directly in any article. But if you ask her she would tell you she does not agree anyone has the right to sell off their cows and rolling stock.

 

In the past year Roxanne has been quoted helping bring her husband’s story to light in several national and international news stories highlighting Hans immigration to the US in 1988 in pursuit of the American dream.

 

According to one Dutch news report his dream was to build a dairy of his own with 700 cows - an unheard of herd size in his native Netherlands.

 

Twenty years later in 2008 the 37 year-old dairyman had built up two modern dairies in California with 18,000 cows and some 86 employees.

 

But Tulare County’s multi-decade dairy expansion came to a screeching halt in 2008 with the worldwide recession affecting commodities, banks and real estate.

 

It came home to roost on the young dairyman’s shoulders.

 

When he died Hans left behind kids ranging from the age of 2 to 14

 

The story impressed US Ag Secretary Tom Vilsack who met with Roxanne in March and  later in August of last year in a meeting with dairymen set up by Jim Costa, the local congressman. According to one account Vilsack called Roxanne to the front of the room  where the meeting was held at the Souza Dairy “and explained how meeting with her and her children touched him.He explained that he recalled a painful memory of a friend lost to suicide.” The account is from central California dairy farmer Barbara Martin who pens A Dairy Goddess’s Blog.

 

The story also made the news in several national news accounts of rural suicide in the midst of the financial crisis down on the farm.

 

In at least one news story Roxanne was quoted as blaming the bank for changing the terms of a loan.

 

$50 Billion Lost

 

The financial crisis continues says Kings County dairy activist Joaquin Contente.

 

”In the past few years our dairy industry lost $50 billion in income and equity. Add it up and it’s bigger than the Gulf Coast oil spill.”

 

Contente says simply figuring what a milk cow sells for today at about $1200 per cow vs $2000 a cow before all this - adds up to $9 billion lost in cows alone.

 

“Today about 20% of local dairy producers are out of equity” and could face foreclosure from their bank too if there is another downturn in prices he contends.

 

On the more hopeful side milk prices are much better today than they were in 2008 and Contente says that at least “most of us us can pay our day to day bills.”

 

There is however the worry that feed prices so important to the industry are suddenly spiking again in late 2010 to $5.80 per bushel.  Fed by speculators there was a spike in corn prices to $7.50 a bushel in mid 2008 preceding the collapse of milk prices down to$10 per cwt in late 2008 from $17 per cwt just few months before.

 

Just before Christmas of that year Hans Reitsma committed suicide .

 

 

Tuesday, October 19, 2010

 
 

 

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12 Replies
Veteran Contributor

Re: From the parlor pit 10-20

The saddest part of that story is that his wife and children have to deal with it all alone. Debt is very cruel, and it can turn on anyone.  A wise man told me only borrow for things that don't depreciate...today is hard to know what is depreciation proof.  A lot of people thought housing fit that description...only to be wrong.

 

With milk it is a demand problem.  The price of beer keeps going up, and it doesn't slow consumption.  If it wasn't for school lunch programs buying milk, consumption would be even worse. 

 

 

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Veteran Advisor

Re: From the parlor pit 10-20

jec22 there is nothing that will not or can not depreciate.

Even land will, and has, depreciated with the right economic situation.

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Senior Contributor

Re: From the parlor pit 10-20

I don`t mean to deminish the tragedy of the story at all. One just wonders if the dairy farmer had stopped when he reached his 700 cow dream and paid off debt, doing a better job with that "smaller" operation. I mean, good lord!  18,000 milk cows?

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Veteran Advisor

Re: From the parlor pit 10-20

That certainly is a valid question.  Theres another one in Michigan that has gone into recievership that had 20,000+ cows fotunatly no one took their life over that deal.

 

BA are you done with harvest? JR

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Senior Contributor

Re: From the parlor pit 10-20

Hey Jr, I`ve had a lot of fixing this year, a couple days should polish it off. It`s a tinkerbox out there, one spark and the whole neighborhood goes up. I don`t know much about milking, you pump the tail to make milk come out? Smiley Happy  It seems these big outfits have broken the milk market. Would this have been a case for government supply management?  Maybe give a high guarantee price on the first 80 cows and after say 200 cows the producer is totally at the mercy of the market.

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Veteran Advisor

Re: From the parlor pit 10-20

There was a large place just north of 69 east or west of Flint that had a viewing room for visitors to watch them milk.

Believe they milked continuously with cows in 4 barns attached to parlour just rotating through.

They had several units like that and welcomed visitors.

Visited it a couple times back in the nineties.

Are there more or is that the one you mention?

Name will probably come to me later.

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Veteran Advisor

Re: From the parlor pit 10-20

BA no It's squueze and pull on the **bleep** down below!  Shees I may have to get up there and educate you LOL   And yea it is so dry with no humidity that last sunday a spark from something in the stave silo caught the leaves and fines ontop of the silo unloader to smoldering didn't damage anything but sure scared me to death! JR

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Veteran Advisor

Re: From the parlor pit 10-20

Cannuck I think you are talking about Green Meadows they are a tootally different operation than the one I am talking about real nice folks the Greens are some nice folks the two brothers that started it were the cream of the crop good farmers and real cattle man.

 

The farm I was talking about is a Verba hoff dairy down in Hudson Michigan with 5 or six other sites as well

http://www.farmanddairy.com/news/rabo-agrifinance-starts-foreclosure-on-vreba-hoff-dairy/16425.html

 

 


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Veteran Advisor

Re: From the parlor pit 10-20

Actually I am not for supply management in any way the bigs if they played by the same rules as us smaller guys would be enough to level out the playing field.

Things like No Illegals hired or maybe the same lending rules should apply to all of us  Also if corn can stay up there eventually it will clean out the guys milking in deserts and importing feed

Any supply mangement plan will ultimatly favor the large producer! 

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