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Dairy Losses Pile Up

September 19, 2012
By: Jim Dickrell, Dairy Today Editor

The break-even milk price in August for even high-producing Midwest dairy herds getting 24,000 lb. of milk per cow exceeds $22/cwt when all costs are included, according to a spreadsheet developed by Robert Tigner, a University of Nebraska Extension specialist.

The costs are based on $8.11/bu corn, $548/ton soybean meal, $247.50/ton hay and $330/ton cottonseed. Feed costs alone for these herds exceeds $16/cwt of milk produced. Milk revenue is $19.22/cwt, but includes a $1.42/cwt Milk Income Loss Contract payment. Returns to management is -$3/cwt.

The break-even milk price for herds producing 20,000 lb./cow is $25/cwt, with returns to management a negative $5.20/cwt.

“Even the producers in the 24,000 lb. category are not meeting full costs and must find family living costs from some other source,” says Tigner.

“Many dairy producers in the Upper Midwest and Corn Belt are producing their own feed so their individual calculation of milk production cost would be different, and probably less than this budget,” he says. “However this budget calculates full economic costs and in the long run dairy producers must cover all costs or go out of business.”


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