High Feed Costs Still Plague Dairy Budgets

February 26, 2013 03:28 AM

Corn prices above $7/bu and soybean meal prices of more $400/ton continue to plague dairy budgets, even with milk prices at $20/cwt.

January budgets prepared by University of Nebraska Extension educator Robert Tigner show 20,000 lb. Midwest herds are breaking even on variable costs at these price levels. Herds producing 24,000 lb. of milk per cow are showing a $2 margin over variable costs.

But when labor and fixed costs are included, returns to management are a negative $5/cwt for the 20,000 lb. herds and a negative $2.50/cwt for the 24,000 lb. herds, says Tigner.

Note that these costs are based on feeding the entire herd, including replacements. And the values are based on market prices as if the farms had to buy all feedstuffs.

"For the typical Midwest dairy farm, the farm did not have to pay the full market cost for feed production since it was raised. However this year more of them are buying some of those feeds," says Tigner.

"The renewal of Milk Income Loss Contract program did add a small amount of money to dairy farm income (about 11¢/cwt), but not enough to make a significant difference," he says.

Feed prices used in the January budget: $7.40/bu for corn, $410/ton for soybean meal, $305/ton for cottonseed, $290/ton for dairy quality hay, $19.98/cwt for milk and $70/cwt for cull cows.

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