It's been a few months since my last post (May 2011) and things have been getting worse. I realize that we did have a short run-up in Class III milk prices. But that was not high enough, nor did it stay long enough to really be much help for most dairy-farmers. The HUGE losses incurred in 2009 & 2010 for several months (16 to 18 months) were not recouped with 3 or 4 months of barely fair milk prices. IMHO.
Feed costs still remain too high and Class III milk prices still remain too low. I'm confused by articles written lately talking about how "higher milk prices?" this year have helped dairy-farmers make a profit?!
I must be in the wrong part of the country and have the wrong kind of dairy operation to enjoy these higher milk prices and profits. My mailbox milk price is a blend of 1/3 class I, 1/3, class II/IV, and 1/3 Class III utilization in our Federal Market Order.
$400/ton whole cotton seed, $360/ton milk cow hay (average quality), most by-products in the high $250+/ton range, and baled corn stalks at $225/ton. Crazy, crazy, crazy!
I'm going to do a little research and look for Average National Cost of Production and Average Milk Price. I've seen some numbers where COP is $4/hwt higher than AMP.
Tuesday, December 13, 2011
Friday, May 6, 2011
Still the "same old, same old" situation for dairy
It's been more than a year since my last blog and the dairy milk price is still NOT enough to cover costs and pay back new debt incurred from the past 24 months. All dairymen need to reduce production to help increase milk price and reduce feeding costs.
Corn, alfalfa, and other feeds are double (200%) the cost from two years ago, BUT our mailbox milk price is only 50% higher. Fuel is higher, freight is higher, utilities are higher, in fact ALL INPUTS are higher to produce each hundredweight of milk. Dairy is still operating in the RED, but processors are enjoying profits on almost every dairy product they sell.
Mailbox milk price should be at least $25.00/hwt to cover current feed and operating costs. However, the May Class III price on the CME is around $16.58/hwt. $8.42 per/hwt short. If the USDA and processor don't start paying dairymen NOW for the milk, there will be hundreds of dairymen going out of business. The resulting shortage of milk has the possibility of driving prices to $35.00/hwt! Is that smart? I don't think so, it's bad for the industry and bad for the consumer.
Corn, alfalfa, and other feeds are double (200%) the cost from two years ago, BUT our mailbox milk price is only 50% higher. Fuel is higher, freight is higher, utilities are higher, in fact ALL INPUTS are higher to produce each hundredweight of milk. Dairy is still operating in the RED, but processors are enjoying profits on almost every dairy product they sell.
Mailbox milk price should be at least $25.00/hwt to cover current feed and operating costs. However, the May Class III price on the CME is around $16.58/hwt. $8.42 per/hwt short. If the USDA and processor don't start paying dairymen NOW for the milk, there will be hundreds of dairymen going out of business. The resulting shortage of milk has the possibility of driving prices to $35.00/hwt! Is that smart? I don't think so, it's bad for the industry and bad for the consumer.
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