MISSISSIPPI STATE -- Mississippi's dairy farms continue their downward spiral with no relief in sight as a result of low milk prices, high fuel costs and damage from Hurricane Katrina.

Bill Herndon, agricultural economist with the Mississippi State University Extension Service, said the state had 235 dairy farms in August before Hurricane Katrina. On April 1, Mississippi was down to 198.

“Since the first of the year, milk prices have fallen about 15 percent. That is causing additional financial stress to the remaining farms, which are facing increased costs for electricity, tractor fuel, and transportation of supplies and milk,” Herndon said. “It will be 12 to 18 months before prices improve, and energy costs are not expected to go down significantly in the future.”

Herndon said the industry experiences peaks and valleys every two or three years. In 2002-2003, dairy prices fell to 25-year lows, then turned around and posted record highs in 2004-2005.

Lamar Adams, Walthall County Extension director, said these wild milk price fluctuations complicate the budgeting process for dairy farms. Farmers already were getting out of the business before Hurricane Katrina hit on Aug. 29, but then many more farms in South Mississippi sold out in those first days and weeks after the storm.

“Without electricity, farmers had to run generators to milk the cows. Trucks could not get to the farms, so farmers had to dump the milk,” Adams said. “That meant their expenses were significantly higher, and they were not making any money. Then they also had to repair all the damage from the winds.”

Adams said most farmers have insurance, but not enough to cover complete replacement costs. In addition to the immediate damage from Katrina, the following drought delayed ryegrass for those who still could afford it. Instead of having ryegrass pastures for November grazing, cattlemen had to rely on hay until February.

“When I came to Walthall County in 1990, there were 90 dairies. Now there are 36,” Adams said. “If something doesn't change soon, we'll lose many more farms in the next several months.”

Oktibbeha County dairyman David McGee has worked to make good management decisions for 21 years on Mactoc Farm in the Oktoc Community near Starkville. After graduating with a degree in dairy science from MSU in 1985, he joined his father on the family farm. Together, they have consistently led the state in the “Rolling Herd Average,” the annual average milk output per cow.

“We went from fewer than 100 cows to more than 200 in the first 10 years. We were able to increase production by more than 10,000 pounds of milk per cow from 17,500 pounds to 28,000 RHA. We pushed good genetics and did whatever we could to control the environment,” McGee said. “We have continued to do what we could, but the cycles in the industry are getting too short. One out of three years may be decent.”

In addition to falling milk prices, McGee said storms have added to his expenses and pushed him to sell his cattle.

“Hurricane Katrina took down about a third of the shade cloth over a 200-cow lock-up barn, and we replaced it with a roof. Then recent straight-line winds collapsed that roof,” McGee said. “There's really not much infrastructure to support the industry in this area. It's getting harder to find people to work on dairy equipment.”

Since the McGees' registered Holstein herd has national appeal because of good genetics and high production levels, they opted to sell their cattle through private treaty to a much larger farm in Kentucky.

Herndon said Mactoc Farm's ability to consistently lead the state in production is a sign of good management.

“It shows everyone how tough things are when farms like this one get out of the business,” Herndon said.