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California’s Cost of Milk Production Outpaces Mailbox Prices

11:59AM Aug 15, 2013

State ag department reports 24¢ per cwt. loss and substantial production decline in mid-year review.

California dairy producers received an average of 24¢ per cwt. less than they received for producing 100 lb. of milk during the first quarter of 2013, according to a 2013 mid-year review of California’s dairy industry released this week by California Department of Food and Agriculture (CDFA). 

The average mailbox milk price paid to California producers was $17.45 per cwt. for the first quarter of 2013, CDFA reports. That’s up from $16.63 per cwt. for the first quarter 2012.

The cost to produce milk during the same period was $17.69 per cwt. That’s an increase from $16.63 per cwt. for the first quarter 2012.

For the first six months of 2013, California recorded decreased milk production, declining by an overall average of 2.9% from the same time period in 2012, CDFA notes. The state’s milk production totaled 21,813,661 pounds during the January-June 2013 period.

For the U.S. overall, comparing January-June of 2013 to the same time period in 2012, milk production showed relatively no change.

California’s top 10 counties accounted for 95% of the state’s total milk production and 20% of the nation’s total milk production.

Tulare County continued to lead the state, accounting for 27.7% of California’s milk output. It was followed by Merced County at 14.7%, Kings County at 10.3%, Stanislaus County at 10.2%, and Kern County at 10%. The milk production of these top five counties accounted for 15% of the nation’s milk production, CDFA says.

In addition, the 541 dairy farms producing more than 2.4 million pounds of milk per month – that’s 36% of the state’s dairies – produce 73% of California’s milk marketings.

In its breakdown of feed ingredients, CDFA shows that alfalfa hay and corn silage represented the highest percentage of total feed costs on California dairies.

Classes 4a and 4b, which represent cheese production in the state’s milk pricing system, accounted for 79% of the milk pooled in California.

For California, January-June 2013 production, compared to 2012, showed:
• total nonfat dry milk (for human consumption) was down 33.8%;
• total butter dropped 6.3%;
• total other dry milk products rose 159.4%;
• total cheese saw no change;
• Class 1 Sales of Fluid Milk (including half-and-half) declined 1.8%.