On Thursday, the U.S. Department of Agriculture released a milk-feed ratio that practically matched the worst ratios put up in the depression year of 2009.
According to the USDA’s “Agricultural Prices” report, the preliminary milk-feed ratio in March is 1.48 — nearly as bad as the revised ratio of 1.45 for June 2009, the lowest point that year.
The milk-feed ratio is a rough approximation of dairy profitability using current feed costs and milk prices.
High feed costs have been primarily responsible for the dismal performance of the milk-feed ratio in recent months, but milk prices have started to drop, as well. Compared to February’s report, the all-milk price has dropped from $17.70 to $17.40 per hundredweight.
February’s ratio has since been revised from 1.58 to 1.55.
Some people question how valid the USDA’s milk-feed ratio is. 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.