About 17 million pounds of milk is being delivered to Valley milk and cheese processing plants, about one million more pounds than needed.
That oversupply has pushed the amount farmers get for their milk down by about 25 percent. Combined with a steep increase in feed costs they are losing money.
As a result 17 Land O' Lakes dairies in Tulare and Kings Counties have accepted early contract buyouts from Land O' Lakes. Some are selling out completely. One major producer, Alvin Souza farms is filing for bankruptcy.
Tulare County Agricultural Commissioner Marilyn Kinoshita says it's an unfortunate situation for farmers, and the county. "It's very sad to see because these dairy men are very passionate about what they do, but you know their bottom line just couldn't support their families and their workers."
Kinoshita notes Tulare County is the top dairy producing county in the United States with annual sales of over one billion dollars. She estimates the cutback will reduce revenues by more than $90 million.
While dairies are getting less for their milk, it is not expected to translate into lower prices in the grocery stores.
Land O'Lakes offered its members a number of options that were intended to address the situation. One of those options was offering an incentive to California members who conclude their milk supply agreement and membership with Land O'Lakes. A number of members accepted this offer, which helped the cooperative better manage its facility, while at the same time providing members greater flexibility in making choices for their businesses.