That from Robert Tigner, a University of Nebraska Extension dairy specialist, who runs monthly budget estimates for Midwest dairy herds.
“This past May, [our] same budget showed that dairy farms were generating enough revenue to pay variable costs and at a minimum generating a small amount that could cover some fixed costs. Not so for the July milk budget,” he says.
“Even the best performing financial result showed not enough revenue to cover variable costs. The lowest breakeven price was $23.41/cwt.,” Tigner says. A tie-stall operation yielding 20,000 lb./cow had a breakeven of $27.72, assuming all feed was purchased.
Even when Tigner included an estimated $1.87 Milk Income Loss Contract payment for July, revenue was more than $5 short of full breakeven and 34¢/cwt. short of covering all cash costs, he says.
“All of the change in this month’s budget was due to feed costs,” Tigner notes. The feed costs Tigner used in budgeting were $7.71/bu corn, $555/ton soybean meal, $290/ton hay and $300/ton cottonseed. The mailbox milk price was $16.48.