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April 18, 2018

Rising Feed Prices Continue to Squeeze Dairy Margins

 |  By: Jim Dickrell

Rising Feed Prices Continue to Squeeze Dairy Margins

 

Though milk component prices rose in March, most of that gain was erased by rising feed prices, says Robert Tigner, an Extension dairy educator with the University of Nebraska.

 

He prepares monthly dairy budgets for the western Corn Belt, applicable to the I-29 Corridor and most of Iowa. “On the income side, total income rose due to increased protein and butterfat prices as well as a rise in pounds of butterfat. A slight decline in protein pounds and a big move to a negative PPD, -$0.30, softened the improved component prices effects,” he says.

 

The problem was feed costs, which rose more than 40¢/cwt. “Corn was 10¢/bu higher, soybean meal was $24/ton higher and cottonseed was $6.25/ton higher,” he says.

 

The bottomline was consequently red in three of Tigner’s four scenarios.  Only freestall herds producing 24,000 lb of milk per cow saw green in their March budgets, and then by only 15¢/cwt when labor and returns to management were included. Tie stall herds producing 20,000 lb/cow had the largest losses, at $3.04/cwt.

 

The budgeted breakeven numbers for each type of herd:

 

24,000 lb/cow freestall herd: $15.36

20,000 lb/cow freestall herd: $17.39

24,000 lb/cow tie stall herd: $16.81

20,000 lb/cow tie stall herd: $18.93

 

One of the big differences in cost is labor. Tigner estimates labor to milk, feed and care for cattle in tie stall barns is running at $3.40 to $4/cwt based on wage rates of $13/hour. In freestall operations, the wage cost is estimated to range from $2.25 to $2.66/cwt.

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