LEVEL CROSS, N.C. (AP) — Don't ask Keith Hockett if he's "got milk?"
Not today. Not after he just hauled another trailer load of his family's prized dairy herd to a slaughterhouse in South Carolina.
By late August, all 473 cows will be gone — chopped up into steaks, roasts and hamburger.
That makes for sad times along Hockett Dairy Road. For the first time in nearly 65 years, the family will be out of the milking business.
"Here we are moping over cows, but they are just like family," the 50-year-old Hockett said recently. "It's awful. That barn looks like a ghost town."
The News & Record of Greensboro reported that over the past several months, a growing financial crisis has forced the Hocketts and an unknown number of other North Carolina milk producers out of business.
The culprit: rising production costs and falling milk prices.
"The tightness in the economy is putting a lot of stress on these operators," said Chester Lowder, director of livestock programs with the North Carolina Farm Bureau. "We are about nine months into this, and we're not seeing any turnaround. ... I'm scratching my head trying to figure out what the answer is."
One answer is to bring the nation's milk supply in line with demand.
When that happens, producers should begin to see prices rise again.
In 2007 and 2008, milk prices spiked because of production problems in the European Union and New Zealand, two of the world's major suppliers. That, in turn, benefited U.S. dairy farmers, who found foreign markets for their milk.
Then, the global financial crisis hit.
"Everything that helped the U.S. become a significant milk producer went away," said Geoff Benson, a North Carolina Cooperative Extension economist and professor at N.C. State. "The production backed up in the pipeline, and there was nowhere for it to go."
In January, milk prices began to drop. While that benefited consumers, dairy farmers began to suffer.
"In 64 years in the dairy business, I seen hard times," said Stanton Hockett, Keith Hockett's 75-year-old father, who helped start the family business. "But I've never seen anything like this."
Producers who had gotten as much as $25 for 100 pounds of milk in 2007 saw the price drop to around $11 this year. To break even, farmers say they needed to get around $17 a hundred.
"That's a loss of $6 a hundred," Keith Hockett said. "When you are selling a million pounds a month, you are losing $60,000 to $70,000.... Dairy farmers are starving to death."
As Keith Hockett and his brother, Herschel, watched their debts rise, they figured they had three options: declare bankruptcy, which they quickly ruled out; borrow $500,000 to pay off their creditors, but lenders wouldn't give them any money; or get out of the business.
An organization called Cooperatives Working Together provided them a way to take the last option, but also hang onto their 500-acrefarm, parts of which have been in the Hockett family for more than 200 years.
The CWT is a non-government organization funded by dairy cooperatives and individual farmers, who contribute an assessment of 10 cents per 100 pounds of milk produced.
Then, using the assessments, the CWT will periodically buy up dairy herds in an effort to reduce production and boost milk prices.
The Hocketts were one of a handful of North Carolina dairy farmers accepted for the program. Specific numbers have not been released.
Experts cannot predict how many Tar Heel dairy farms could be lost during the current crisis. But numbers have fallen dramatically in recent years.
In 1997, the state had more than 1,200 dairies. Now, the number is below 300.
"The pain is over for us," Phillip Hockett, Keith Hockett's 26-year-old son, said recently. "It's the guys who have no options. They could lose everything they've got."
CWT rules require those accepted for the program to sell their herds for slaughter and refrain from producing milk for a year or pay a 10 percent penalty.
The money the Hocketts got from CWT and the slaughter of their cows totals about $700,000, enough to pay off their debts of about $400,000.
Eventually, the Hocketts want to get back in the dairy business. They still have 475 cows that are too young to milk.
But they want to wait for the economy to improve, figure out how to reduce production costs and save some money.
"We're trying to put our lives back together," Keith Hockett said. "... (But) we love milking cows."
Liquor-Agency Files Offer A Taste Of History
Wisconsin Man Pleads Guilty In Meatpacking Plant Fire
