Home Indiana Agriculture News Milk Prices and Dairy Producer Profits Dropping

Milk Prices and Dairy Producer Profits Dropping


Dairy farmers will soon discover that 2015 will be a challenging year to maintain profitability, according to one industry expert.“Milk prices have dropped 30 percent compared to 2014,” said Mike Hutjens, professor of animal sciences emeritus, University of Illinois, Urbana. “Since feed costs can represent 50 percent of the total cost to produce milk, many dairy farmers are making feed changes that could save ten cents a day but are losing 25 cents of income in the process.”

When milk prices drop, Hutjens said there are several “Golden Rules” that should never be broken:

  • Golden Rule 1: Never give up milk. One pound of additional dry matter can lead to two pounds more milk. One pound of dry matter can cost 12 cents while two pounds of milk can be valued at 30 to 38 cents additional income or a profit margin of 18 cents or more per cow per day.
  • Golden Rule 2: Build your milk check through higher milk components (20 to 40 cents more per cwt), lower somatic cell counts (30 cents per cwt) and lower bacteria counts (40 to 60 cents per day).
  • Golden Rule 3: Make feed decisions with long term consequences in mind. Be careful that feeding changes do not jeopardize your future herd health or performance. The decisions you make to save 30 cents per cow per day today, may end up hurting you in the long run. For example:
    • Removing organic trace minerals may lead to increased mastitis risk, lower reproductive performance and lower immunity.
    • Delayed breeding of cows can lead to an additional 120 days open. Each extra day open can cost 0.2 pound of milk per day as cows do not calve on time.
    • Reduced hoof trimming can lead to more lame cows, which can result in more culling, less feed intake and lower fertility.
    • Slow heifer growth (less forage, concentrate and/or minerals) can result in heifers calving at 26 months of age instead of 23 to 24 months of age. Each additional day heifers consume more than $2 per day in feed costs and lower lifetime milk production.
    • Removing feed additives can save 6 to 20 cents per cow per day, but the economics of the recommended and effective feed additives are profitable at $24 or $16 per cwt. Hutjens advises not taking out theses additives for lactating cows:
      • Ionophores to improve feed efficiency, cow health and milk production
      • Yeast product to stabilize the rumen environment, control rumen pH and lower lactic acid levels
      • Silage inoculants to reduce dry matter losses and increase energy
      • Mycotoxin binders to support immune function, rumen health and higher dry matter intake
  • Golden Rule 4: Monitor cow response when making feed changes. Cows are always “talking”; are you listening? Watch for:
    • An increase of milk urea nitrogen (MUN) from an optimal of 8 to 12 mg/dl.
    • A change in management level milk or 150 day milk by more than three pounds.
    • A change in dry matter intake of more than two pounds per cow per day.
    • Shift in milkfat or milk protein concentration by 0.1 percentage point.
  • Golden Rule 5: Dry matter intake is key. If dry matter intake declines because of lower quality forage, removal byproduct feeds, or less protein supplement, rumen fermentation slows. There is also less microbial amino acid synthesis and lower energy intake, which impacts milk yield, leads to weight loss and can reduce fertility. Fresh cows suffer the most.

“The golden rules can be expanded and customized by dairy farmers, consultants and veterinarians, and the good news is in late 2015, milk prices are expected to recover,” Hutjens said. “Will your herd and cows be ready to respond to this opportunity? Will somatic cell count be optimal? Will cows be pregnant? Will lower peak milk production lead to lower production six months from now? Make profitable decisions and review your golden rules and responses.”

Hutjens will be a featured speaker during Dairy: Today’s Greatest Business Opportunity, part of the Alltech REBELation event exploring innovation, inspiration and world-changing ideas in Lexington, Ky., USA, from May 17-20. To find out more information about the latest nutritional tools for your farm and to register, visit https://rebel.alltech.com.


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