Profitability ratio drops on lower milk prices

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Lower milk prices in December caused the milk-feed profitability ratio to drop.

According the “Agricultural Prices” report released Monday by the U.S. Department of Agriculture, the preliminary ratio in December was 1.65, down from November’s adjusted figure of 1.73.

The all-milk price used in determining the ratio for December dropped to $21.10 per hundredweight, compared to $22 in November.

Feed prices, meanwhile, were fairly stable from one month to the next. Corn was $7.01 per bushel in December, compared to $7.02 in November; soybeans were $14.70 compared to $14.30, and alfalfa hay was $217 a ton compared to $215 a month earlier.

Some people question the validity of the milk-feed ratio. See this story. But the USDA has been using the same formula for years, comparing the same commodities. Therefore, it can serve as a relative measure for comparing different points in time.

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Dairy Matron    
PA  |  January, 04, 2013 at 11:29 AM

I love the euphemisms you guys in the "industry" come up with when you want to masquerade the truth. "Profitability ratio" is evil double speak for "how can we screw you guys now and get away with it by using fancy 'scientific' sounding language that disarms you foolish dairy farmers?" Get a life. The raw milk pricing system is designed by LAW to steal dairy farmers and their support businesses blind while the processors/i.e. "industry" flourishes from the devalued farm milk prices they got implemented under the infamous 2000 federal "Order Reform" that, thanks to our illustrious, DSA-supporting NMPF dairy co-ops, excludes from the formula the farmers' farm business costs to produce the milk. That's OK. God sees all and will even out the tally on Judgment Day.

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