Despite slightly lower feed costs in April, Midwest dairy budgets continued to show negative returns to management for all but the highest producing herds.
“The April milk budgets showed increased losses compared to March budgets, approximately $10-12 per head,” says Robert Tigner, a University of Nebraska Extension specialist. Budgets are based on market prices for milk and feed.
Mailbox milk prices in the Central Order were down slightly in April, due mostly to a larger negative Producer Price Differential. The PPD was -19¢ in April; it was -7¢ in March. Corn was 9¢/bu lower in April and soybean meal was $4/ton less as well.
“The 20,000 lb./cow budget does cash flow all variable expenses but only provides $1.15 to pay fixed costs and unpaid labor and management,” Tigner says. When you add those costs in, the budget loses $1.08/cwt. In contrast, those herds producing 24,000 lb/cow show a 55¢/cwt positive return over all costs.
Keep in mind that the budgets are based on market prices. Many producers have stored alfalfa hay or haylage they likely produced for less than $215/ton of dry matter. So these farms are likely not losing as many dollars as Tigner’s budgets suggest. But the budgets do show the opportunity costs of feeding high priced hay through cows rather than selling it.
Many producers have also pre-bought other feed and supplement with the strong milk prices from 2015. So they likely won’t feel the full brunt of these lower milk prices until these pre-bought feed inventories are consumed.