The Green Bay Press-Gazette reports high grain prices remain a factor hurting profitability on the dairy farm, but rising milk prices may outweigh costs for Wisconsin dairy producers.

Corn and soybean producers are optimistic about the upcoming planting season. Commodity prices at near-record highs have farmers upgrading equipment, putting a rush on tractors, combines and other equipment. Even with higher costs for land, fuel and fertilizer, high grain prices ensure farmers will make solid returns if they manage their operations reasonably.

While the future looks bright for equipment dealers, farmland owners and grain producers, the outlook for dairy producers remains unclear.

In 2010, dairy producers were recovering from the previous year when milk prices collapsed. Net income was higher last year, but $1.1 billion less than in 2007.

Dairy farmers are expecting relief this year with rising milk prices. A University of Wisconsin dairy specialist expects milk prices to surpass $18 this month. The estimated milk price is higher than those in the industry expected at the end of 2010.

Wisconsin dairy producers will be hurt by soaring grain prices, but not as much as producers in the West. Most Wisconsin dairy farmers grow their own feed, diluting the effect of the higher costs.

Tina Kohlman, a dairy specialist for the University of Wisconsin Extension said a milk-to-feed price ratio of 3 or higher is necessary to make a profit on the dairy. January milk prices were $16.70 per hundred pounds, but high feed costs made the ratio 1.79. The ratio of 3 or higher hasn’t been achieved in the past four years. Last November the ratio was 2.23 when milk hit $18.50, but was again restrained by high feed costs.

Source: Green Bay Press-Gazette