Dairy farmers hope to grow demand for their products and maintain “favorable” milk prices as part of June Dairy Month.
Midwest dairymen so far this year are catching up economically after disastrous 2009 and 2010 business years, according to Mike Hutjens, University of Illinois professor of animal sciences emeritus.
“Illinois milk producers need $17 per 100 pounds to cover feed, variable, fixed, and labor costs with a modest return on assets,” Hutjens said. “Currently, milk prices have been favorable, but dairy managers need a full year of these margins to replace lost equity in 2009-2010.”
Several factors will be critical to maintaining a successful 2011 dairy business model.
Hutjens said milk prices will depend on supply and demand with more than 13 percent of current U.S. milk solids being exported.
World demand is important to keep supply and demand balanced, and that may be impacted by the financial problems in some European countries and unrest in the Mideast.
“Corn price will also impact profit margin,” he said. “Late planting of corn in the Midwest, flooding along major rivers such as the Mississippi, and drought in the Southwest will impact corn and feed prices. Higher corn prices will raise the price of corn silage, forages, and byproduct feeds.”
Meanwhile, energy costs (price of oil) will affect fertilizer, fuel, and energy costs, he said.
In order to overcome these challenges, Hutjens said dairy managers will need to focus on areas that they directly control on their farms.
The dairy specialist suggested Illinois dairy farmers pay attention to maintaining forage quality to reduced purchased-feed costs; calculate feed inventory to meet 2011-12 herd needs; and use byproducts to replace higher-priced corn, soybean meal, and fat/oil in dairy rations.
He also recommended keeping total feed costs per 100 pounds of milk to less than $7 per hundredweight for lactating cows, and maintaining high milk yields to produce more income and profit to maximize feed efficiency.
They also must sell their products to an increasingly segmented consumer base.
“June is Dairy Month,” Hutjens said. “It’s an opportunity for dairy managers to promote the importance of milk production, the nutritional value of dairy products, and the economic impact dairy farms have on the Midwest’s economy.”