In 2007, prices paid to America's dairy producers soared to record highs, but as the recession deepened in rural America in 2009, prices fell off the cliff. Dairy producers responded to weak demand by cutting their herds.
According to USDA, dairy cow numbers declined 2.6 percent nationally from November of 2008 -- but not in the Midwest. There, researchers found more cows were being milked than the year before. In Wisconsin, for instance, milk production actually rose 4.5 percent in 2009.
An operation reflecting the growing trend is the Crave Brothers Dairy near Waterloo, Wisconsin. And as producer Art Hackett discovered last winter, low prices haven't made life easier, but years of improvements at least made $9-milk survivable.
When the four Crave brothers began a major expansion of their farm about seven years ago, their goal was building a better dairy farm.
Charles Crave: "We decided this was the opportune time to take the equity we had and build something drastically better than what we had in the past."
One of the first things the crave brothers built was an on farm cheese factory producing specialty, European style cheese such as les frere and soft mozzarella.
Then came bigger barns with room for larger framed cows.
They partnered with an electrical contracting firm to build a digester to generate power from the methane bubbling from composting manure.
Art Hackett: "That was at a time when milk prices were pretty darn good."
Charles Crave: "That's right. We knew they wouldn't last forever. But we didn't last forever. We didn't expect them to fall right off the table like they did last year, though."
Charles Crave: "We bled for a while...not as bad as some folks but it's been a real tough year, year and a half."
But Charles Crave, who handles the business end of the farm operation, says the improvements have been paying off during the down turn.
Charles Crave: "Half or more of our milk is used to make cheese. Being seasonal cheeses during fresh mozzarella season more of our milk is used."
And remember, the Craves...that's Charles' brother George scooping curd out of the vat....own the cheese factory....getting the added value of a finished product rather than selling milk as a bulk commodity. And the varieties the craves produce compete with European imports which are at a disadvantage because of a weak dollar.
Then there are efficiencies built into the process.
Charles Crave: "We can take our milk, stored in this milk silo, take it out of this spigot and hook it to a pump, and send it underground to our cheese plant a hundred yards away."
Another pipeline returns whey from the cheese plant to the farm. It's mixed into the feed for the cows. The material, and the profits, stay on the farm and in the family.
Charles Crave: "I've told a lot of folks when you make an investment eight nine years ago, you'd like to see it pay off and fortunately for us, that's what the cheese factory has helped us through this past year."
The manure digesters are another project which adds value to the farm. They pull the methane from composting manure and use it to power a turbine which generates electricity.
The power system is owned by an outside company.
Crave says he's not in it for the electricity, he's interested in what's left over: the composted residue from the process is used for bedding. For the cows.
Charles Crave: "We have cows that have longer lives than a lot of herds and a lot of it has to do with how comfortable they are.. It's very warm in the winter. If you were laying on sand on a day like this it would be pretty cold. With this they're nice and comfy."
University researchers like to point to the crave brothers farm as an example of what can be done to make a farm more energy, and economically efficient.
But Crave says it takes a certain type of operation for the system to work.
Charles Crave: "One of the things is we have four partners. I have a sister in law with 25 years in the milk marketing business. So to have those resources in house is a tremendous asset.
There's probably been as many of this that have failed as have succeeded over the past ten years. Before people get into the idea of value added on farm production, they have to decide if they have the physical and mental attributes to do it. And if they want to spend the rest of their lives doing it."
For Market to Market, I'm Art Hackett.