Dairy farmers combat cattle feed price with forage

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MAYSVILLE, Ark. (AP) — The feeding barn at Valley View Farms was practically empty on a recent afternoon except for a few dairy cows receiving medication.

Normally, 300 cows stand on a concrete floor of the barn in Benton County eating a grain mixture all day.

Tim Crawley's cattle are spending more time out at pasture, and less at the feed trough, as the rising prices of agricultural commodities, such as corn, are increasing production costs.

Dairy farmers say the year's increases in costs are preventing some from benefiting from higher minimum milk-producer prices, so they're using grazing, state subsidies and other modifications to help turn a profit.

Average milk prices have been recovering since2009 when they bottomed out around $12 per hundredweight in the U.S. Department of Agriculture's southeastern milk-marketing order. A hundredweight, the dairyman's base unit of measurement, represents 100 pounds of fluid milk, which equals about 12 gallons.

Milk prices in recent months have been averaging about $20 per hundredweight, according to USDA data.

"It's a balance to maintain your profit margin and your costs," Crawley said. "You have to work on it all the time."

The pricing recovery is coming during a part of the season when pastures are lush and animals are typically put out to graze. Farmers say spring and fall are the best times for pasture.

While grass feeding helps reduce costs, it also lowers milk volume - and the milk paycheck, farmers say.

The pricing rebound is also encouraging farmers to produce more milk.

National data for April showed the national herd size grew to 9.19 million dairy cows, compared with 9.11 million dairy cows in the same period a year ago. As a re-sult, production rose 1.5 percent to 16.7 million pounds in April compared with the same period last year.

U.S. dairy prices are partly affected by the export market, which continues to experience strong demand from China.

The last time cows under Crawley's care grazed six hours a day was in 2009, when low prices for producer's milk affected dairy farmers across the country.

Typically his animals are restricted to the barn. Fewer than 10 Arkansas dairies operate under a strict confinement model where forage is brought to the animals, as Crawley's farm has operated, Arkansas dairymen recently said.

Instead, the feeding practice of a majority of the 125 grade-A-licensed dairies in the state is a combination of pasture grazing and a grain mixture that is fed in or outdoors.

In addition to using pasture more intensively, state producers also receive relief through an additional financial payment made available through the Arkansas Dairy Stabilization Fund.

The fund has already paid out $7 million of the $9.1 million allocated for the dairy subsidy intended to stabilize an industry forecast for extinction by 2015. Arkansas dairies directly employ about 1,000 people.

The Arkansas Stabilization Fund is a combination of the grant payments and a milk production and quality incentive.

While the state's dairy industry is one of the nation's smallest when ranked by monthly dairy-production volumes, the program, which is financed by taxpayers, has been credited with keeping farmers in business.

"I don't know how I'd be in business without it," Crawley said of the monthly grant payments that have averaged about $2 per hundredweight.

Farmers have other methods to reduce higher costs but experts say high feed prices are difficult to avoid.

"It's hard to get away from high corn prices," said Wayne Kellogg, a professor of animal sciences at the University of Arkansas at Fayetteville, on Tuesday. "When corn is high, the alternative feeds tend to rise in price as well, because of demand."

But farmers have other options when it comes to rationing the more-expensive grain.

Cows not milking well and those that have not yet begun to produce milk don't have to be fed grain, he said.

"You can't just cut out feed for milking cows," Kellogg said. "You can cut back for 'dry' cows but milking cows need too much energy to get it from pasture."

Dairy cows eat cotton seed, distillers grains, corn gluten and silage and hay.

David Daniel, a field representative with cooperative Dairy Farmers of America, on Tuesday said dairy farmers are scared by what corn is doing to feed costs, "and they're looking at ways to help control feed costs and grazing is one of them."

Feed prices per hundredweight have more than doubled from around $7 to $15, Daniel said.

"Corn or a corn byproduct makes up a big part of a dairy feed ration," he said. And all dairy farmers use a grain feed mixture to help with milk production, Daniel added.

Demand for corn is up in part because of ethanol blends in gasoline, as the Environmental Protection Agency increased the amount of ethanol blended into gasoline supplies from 10 percent to 15 percent. Corn is used in ethanol production.

A drought in China could force prices even higher.

The United Nations' food agency has warned that the drought is driving up the country's wheat prices, and now the focus is on whether China will buy more from the global market, where prices have already risen about 35 percent since mid-November, The Associated Press has reported.

Not every dairy farmer in Arkansas is upset about the high cost of feed.

Frederick Simon, of Simon Brothers Dairy Farm in Conway, said he's welcoming higher corn prices since he grows it for his herd of 165 cows.

"We have a distinct advantage on prices," he said.

The price of corn hit an all-time high earlier in April at $7.8375 a bushel, well over the previous high of $7.65 in June 2008, as previously reported by the Arkansas Democrat-Gazette.

"The market moves on speculation that there is going to be a shortage of corn," Simon said. "It may be a good year."

Copyright 2011 The Associated Press.

 


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