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.
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