July 10, 2017

Cost of Production Continues Upward

 |  By: Alison Wedig

USDA’s Economic Research Service (ERS) cost of production estimate put May operating costs at $13.32 per cwt, up 21 cents over March and 28 cents over February. The average for the five months of 2017 is $13.19. May and April operating cost estimates are similar, but are trending higher than the previous months. The largest increase comes from feed costs. April and May 2017 feeds costs were $10.45 per cwt, up 33 cents over February. The May 2016 data puts the feed cost estimate at $10.58, 13 cents above 2017.

USDA’s Farm Service Agency estimate calculates different commodities associated with feed expenses. In 2017, alfalfa prices increased $27.00 from January to May, while soybean meal decreased $25.00.

Looking at USDA trends since 2014, it’s evident that while today dairy producers are enjoying relatively low operating costs, economical feed expenses are beginning to increase to averages more similar to prior years.