Dairy farmers struggle to cover expenses as American appetites change

As the holiday season gets underway, Americans are preparing to spend big on baking ingredients. Butter consumption, for example, grew 16% last November and December compared to the rest of 2023, according to USDA data. On average, Americans consumed 6.5 pounds of butter last year, a number that's been on the rise. 

Prices of staples like flour, sugar and milk have been steadily climbing for the past five years, as have the prices for many grocery items, according to the CBS News Price Tracker. Egg prices have skyrocketed 160% since 2019, due in part to shortages linked to several outbreaks of bird flu. Butter is more expensive by 29%, about in line with all grocery increases over the same period. 

Yet the people who harvest the milk that goes into baking essentials say they don't always benefit from the price hikes.

"Rewarding spiritually, not always financially" 

Nate Chittenden starts his day taking care of nearly a thousand cows on his family's dairy farm, Dutch Hollow, in New York's Hudson Valley. His herd of Jersey cows, known for high-fat milk that goes into products like cheese, butter and ice cream, requires round-the-clock maintenance to stay healthy and maximize productivity.

Chittenden, who runs the farm with his brothers and extended family, is able to pool resources with other farms as part of Cabot Creamery's co-op. Still, it can be a grueling business.

"Working on the farm every day, you get an appreciation for caring for animals, caring for another living creature, working with the land, just realizing all of this goes into making food that provides for people," Chittenden said. "It's rewarding spiritually, not always financially." 

How milk is priced

Farmers often sell milk at a federally mandated price to producers who process it into fluid milk, butter, cheese or other dairy products. Around 15 cents of every retail dollar go to farms, and to keep things equitable the government sets the price from farms. 

"When you spend a dollar [at the store], 85 cents of it is beyond the farm," said Michael Swanson, an agricultural economist at Wells Fargo's Agricultural Food Institute. Another 15% goes to processors, who turn milk into consumer products, and the remainder is spent on wholesaling, advertising and other costs. 

"Milk doesn't stay good for very long. You have to eat it, sell it that day or get rid of it. So [the government] wants to make sure that everybody who sends milk to a processor buyer in a district gets the same price back," Swanson explained. 

Farmers can't directly charge more money for their product if their expenses climb, and many cite increased animal feed and labor costs as hits to their margins.

"It's a struggle every year," Chittenden said. "We are one big mistake away from being bankrupted." 

Hope for the future 

Swanson said the tide may be turning for some farmers. Dairy retail prices for consumers have been stable for the past several months, though they are elevated from 2019 levels. Other key expenses are easing as well, with lower feed costs for the past year only now getting passed down to farmers. 

"This year, the dairymen actually have, year to date, 10% more revenue," compared to in 2023, Swanson said. Although labor "never gets cheaper," he added that many farmers could be set up for a strong 2025. "They're in a much better position right now in early December than they were a year ago," Swanson said.

Still, for small family farms like Chittenden's, every day is a challenge — one that requires grit and a determination to keep marching forward.

"No matter how rough a day we have, you get to the end of the day, you get home with your family and you say, we're gonna do better tomorrow," Chittenden said. "I don't need a pat on the back to do this job, you know, but I need people to understand what it takes to do this job."