Tight margins squeeze dairy farmers
June Dairy Month, which celebrates dairy production and promotes the consumption of dairy products, likely is a welcome sight for milk producers.
Published: Jun 2, 2012
Greater milk production, high feed costs, and slumping demand have tightened margins in the dairy business so far this year.
“We can always use more promotion of our products,” said Doug Scheider, president of the Illinois Milk Producers Association (IMPA) and a dairy farmer from Freeport. “Milk prices have dropped and feed prices, in general, are higher. It’s really squeezed our margins.”
Milk prices this year have declined about 20 percent. Many dairy farmers, subsequently, have been losing anywhere from $1 to $3 per 100 pounds of milk produced depending on the region of the U.S., herd size, and level of milk production, according to Mike Hutjens, University of Illinois professor emeritus of animal sciences.
“World milk prices have declined due to economic downturns in European countries such as France, Italy, Greece, and Portugal,” said Hutjens, who noted high milk production in New Zealand and the U.S. also has contributed to lower prices. “Abundant rain, producing high levels of pasture (in New Zealand), and a mild winter in 2012 (in the U.S.) allowed cows to respond with more milk,” he said.
Solutions for dairy managers to remain profitable include generating a higher milk yield per cow, increasing fat/protein in milk, high-quality production (processors pay a bonus for quality milk), or using byproduct feeds such as distillers grains to reduce feed costs, Hutjens noted.
But many dairy farmers in Illinois, who are used to the cyclical nature of the business, likely have done all they can to improve efficiencies, according to Scheider.
“It becomes more of a challenge to try to find ways to become more efficient,” said Scheider, who encouraged fellow producers not to cut back on feed.
“You can’t cheat the cows,” he continued. “They need the level of nutrition they’re accustomed to. Otherwise, (dairy farmers) will be in jeopardy of losing milk production and conditioning of the cows.”
Illinois dairy farmers generally are better positioned than some of their out-of-state counterparts to deal with higher feed prices due to the fact so many in the state produce their own feed, Scheider said.
But higher crop production costs also are having an adverse effect on dairy farmers.
The IMPA president believes it’s important for dairy farmers also to connect with consumers.
“Consumers drink a lot of things, and some are not nearly as nutritious as milk,” Scheider said. “(Interacting with consumers) is something we have to keep doing. It’s good for the public to find out more about how food is produced.”
Scheider recently held tours for school children on his farm.
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