Milk Prices

Regardless of markets or economic conditions in the dairy industry, dairy owners and managers should continually ask themselves these questions:

How can we improve feed efficiency?

How can we increase components and milk production?

How can we decrease feed cost?

How can we minimize stress?

While the market outlook for U.S. dairy prices looks promising, American Farm Bureau Chief Economist Roger Cryan says higher milk prices won’t look as good as they have in the past, as rising costs and difficulties in processing and marketing continue through the new year.

Because feed costs can represent 50 percent of the total cost to produce milk, dairy farmers are trying to reduce feed costs. However, with the wrong feed choices, farmers could save 10 cents a day while losing 50 cents of income. Several “Golden Rules” are listed below; do not break these rules.

The average cost to produce milk has climbed substantially so far this year. In our conversations, we have been hard-pressed to find anything — services or products — that are cheaper this year than they were at this time in 2020. Based on our straw poll of producers, average wages are up 10% to 15% on U.S. dairy farms compared to levels a year-ago. The costs of parts has jumped by 20% or more and fuel prices are still trending higher, after already climbing by more than 35%. While the Federal Reserve debates inflation, it’s clear it has already arrived at dairy farms. And I haven’t yet mentioned feed costs. In the first four months of 2021, corn prices rose by 32% year-over-year and soybean prices jumped by 48% versus 2020 levels. Based on my estimates, total feed costs were more than $2 per hundredweight (cwt.) higher January through April than in the same period in 2020.