Falling prices have Idaho dairy farmers worried

Idaho´s dairy farmers are struggling as milk prices plummet. Five south-central Idaho dairies are in Chapter 11 reorganization, giving them time to restructure finances so they may continue to operate under a court-approved recovery plan, said Don Hobson, accountant with the U.S. trustee´s office in Boise. Several others have filed under different bankruptcy chapters. Some dairymen involved blame international trade for their troubles, and others are upset with their lenders. Harold Plantinga, a partner in PAX Dairy Farm in Buhl, said he and his father are considering suing their bank. PAX recently filed for bankruptcy protection as a result of what Plantinga says were unfulfilled promises from the institution. Good Hart Dairy south of Wendell also filed in 2002 after receiving notice from its lender that loans were due and payable. "We knew we were in tough shape, but the letter was a surprise," said Hank Goedhart, who owns the dairy with his brother, Mike. "We thought we still had options." While there were several factors leading to the bankruptcy, the biggest was the price of milk, Hank Goedhart said. "Never in almost 30 years in the business has milk been down for so long," he said. Mike Goedhart said a large part of the problem is the North American Free Trade Agreement freeing up commerce with Canada and Mexico. "NAFTA in my opinion is going to be the ruination of ag," he said. "We have heard that some of the major lenders are requiring more collateral and money up front for the operating loans," said Bob Naerebout, executive director of Idaho Dairymen´s Association. "Credit is tightening up on dairies," he said. "When you´re in financial stress like the dairy industry is, lenders are demanding performance." Gary Genske, a dairyman and certified public accountant with dairy clients in 23 states, said he is aware of at least a dozen Idaho dairies that essentially have been "asked to go find new banks." Genske said the banks´ side is somewhat understandable. If federal lending policies dictate that there be a positive cash flow and equity, then dairies are not going to get short-term loans. With milk prices so low, dairies do not have positive cash flow, and equity is bound to run out eventually.