Despite record high milk prices at the farm level, record high feed costs and inflation followed suite and have impacted everything from feed to labor to machinery. Recently, three dairy producers from coast to coast talked about the biggest, unexpected challenge that faced their dairy this year on a Farm Journal Farm County Update webinar.
Melvin Medeiros with Medeiros Holsteins in Layton, Calif., said that he received 3 inches of rain in December 2021 and was looking forward to entering 2022.
“Then we just watched feed availability become shorter and shorter,” he says. “We’ve seen silage from a record price jump up another 48% to the dairy. We’ve seen hay go up over 50% and almond hulls go up 70%.”
Medeiros milks 1,600 cows and farms 500 acres alongside his wife and sons in California’s San Joaquin Valley and shares that the rising feed costs have thrown him for a loop.
“And then you compound energy costs on top of that and nobody anticipated diesel prices getting as high as they did,” he says.
Medeiros hopes to see more moisture in 2023 to help with feed availability and curve the challenge that proved to be his biggest obstacle for the year. When it comes to risk management, Medeiros says that it was hard to lock in far out prices, with prices so far out of whack. Instead, Medeiros took a 90-day increment approach to contracting feed, but that even proved to be easier said than done.
“Because those costs were so high, we just kept hoping that they would soften up somewhere. We took that approach, but the outputs didn’t come down at all,” he says. “It didn’t help us with a 90-day approach. Fortunately, we did lock in some good milk prices early on. That has helped carry us through the last half of this year. So that’s been helpful.”
Head east to Wisconsin and Jordan Mathews, a partner at Rosy-Lane Holsteins, says they had to change strategy this year.
Rosy-Lane milks 1,550 cows at one of two locations—the home farm in Watertown and a second farm in Paoli. Earlier this year, Lloyd and Daphne Holterman begun the retirement process, and both Mathews and Tim Strobel continue to purchase the business from them, as well as run the day-to-day operations.
With managing a buyout payment, Mathews shared that they’ve really tried to lock in the margin to handle the high input costs.
“So, feed cost were pretty under control for us as we’re getting towards the end of the year,” he says. “We had to keep locking in quarter by quarter.”
Mathews shared that at the beginning of the year, it was easier for them to lock in the margin that they were aiming for, but that became increasingly difficult as the year progressed.
“It got a little tougher,” he says.
Another area that Mathews and his team at Rosy-Lane struggled with was machinery availability, or lack of.
“We had some money set aside in the budget to get a new skidloader and you just can’t find anything in inventory and then you can’t even get a delivery date on things so you’re holding some machinery around for a little longer and the repair bills are hiking up,” he says. “It’s not probably the end of the world, but it does get frustrating when you know we finally have things in line with our budget to make the purchases in a timely manner and you can’t actually make the big purchase.”
In New York, Tyler Reynolds, an owner at Reyncrest Farms, says input cost was the biggest challenge on his farm.
Reynolds milks 1,400 cows and farms 2,700 acres alongside his family near Buffalo. He says that they’re fortunate that they grow a lot of their own forages, but it takes a lot of inputs to get those forages off the field. Reynolds also says that they strive for high yields to offset the cost of ownership.
“It just gets a little scary when fertilizer’s four times the cost of normal feed costs and that is almost double what we’re used to,” he says. “That was the biggest challenge for us.”
Reynolds was getting ready to meet again with his fertilizer and seed dealer and says there are still a lot of variables to play out.
“The guy that we work with passes on his savings to us. It’s a really good relationship,” he says.
Reynolds shares that working with people who have a farm’s best interest in mind is essential.
“Those are the kind of businesses that want to pass savings onto us and that is the kind of people we want to continue working with,” he says.
To listen to the entire conversation with these three producers talk more about issues and challenges they faced in 2022 and how they’re planning for the year ahead, click on Farm Country Update - Farm Journal
