USDA: Milk Production Costs Decline Five Straight Months to $22.49/Cwt.

May 31, 2011 06:16 AM

April’s total feed cost of $10.67 per cwt. ranked as the largest dairy expense.

The cost of producing milk in the U.S. fell for the fifth consecutive month in April to $22.49 per cwt., USDA’s Economic Research Service (ERS) said May 25.
April’s total is down slightly from the March 2011’s cost of $22.62. ERS estimated February 2011’s cost at $23.00. January’s number was pegged at $23.22, and December 2010’s at $23.59.
Of April’s $22.49 total, overall operating – or variable -- costs accounted for $14.13 per cwt., ERS noted. April’s total feed costs of $10.67 per cwt. ranked as the largest expense. The number included expenses for feed that was purchased, homegrown harvested and grazed.
Under the “Allocated Overhead” heading, which basically covers fixed costs, ERS estimated costs at $8.36 per cwt. These include labor, taxes, insurance and general farm overhead.
USDA’s National Agricultural Statistics Service calculated the All-Milk price for April 2011 at $19.40 per cwt.
The numbers don’t give an across-the-board indication whether dairy producers are showing profits or losses, said Brian Gould, professor in the Department of Agricultural and Applied Economics at the University of Wisconsin-Madison.
“If it’s an integrated operation where they grow their own corn, they won’t be as impacted,” Gould said. “If they’re buying all their feed, as many in California do, they will be having a rough time.”

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