Are We There Yet?

November 30, 2012 — DairyProfit Weekly’s Dave Natzke joins us again this week. Dave, it’s been a couple of weeks since we’ve talked, and while action on federal dairy policy reforms and the 2012 Farm Bill has been fairly stagnant, there have been lots of other things happening that have impacted dairy producers. Hree’s what Dave has been following:
One of the big stories this year, of course, was the drought, and its impact continues to affect dairy farmers as we head into the final month of the year. USDA released monthly milk cost of production estimates for October, and escalating feed prices have pushed those dairy farmer costs to the highest level ever, with purchased feed costs up a staggering 72% in the past 10 months. In addition to affecting their incomes, the higher feed costs have impacted dairy farmers in a couple other areas.
First, as you’ve reported previously, Bill, for the second consecutive month U.S. milk production was lower in October compared to a the same month a year ago. That’s in part due to virtually no growth in milk production per cow, as farmers look for cheaper feeds for their cattle, resulting in less milk production. Secondly, with feed costs so high, more dairy cattle are being sold for beef. USDA said October dairy cow slaughter topped 285,000 head, the highest monthly total dating back to 1997. The result is that the nation’s dairy herd is down about 84,000 cows since peaking last April, and the smallest since April of 2011.
Dairy’s year will negatively influence overall U.S. agricultural income in 2012. Lower milk prices will mean gross receipts from milk sales could fall more than $2 billion from record-setting 2011, making up about half the total $4 billion decline forecast by USDA.
It seems like I’m the bearer of bad news this week, Bill, and as we sit here on the last day of November and start to review 2012, I’m reminded of those long trips families take to see relatives during the holidays, and one of the kids in the back seat always asks “Are we there yet?”
Given the bumpy ride dairy has had so far this year, you can forgive dairy farmers if they start to look toward 2013 and ask, “Are we there yet?”

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