Tight Margins Squeeze Dairy Farmers
Like dairy farmers across the country, the producer columnists on the Dollars and Sense panel at Dairy Today’s Elite Producers Business Conference are facing the challenge of low milk prices. The farmer panelists offered attendees some advice for managing tight margins.
“As a farmer, you make the biggest mistakes in good years,” says Michigan farmer Gertie van den Goor.
Panelists Gerald Fieser, Shelley Dickinson and Gertie van den Goor all said they are nervous going into 2016 and have taken measures to prepare for the rocky road many economists think will be the first part of next year.
“You don’t have a year like last year very often,” Fieser days. “So we took advantage of it. We reduced debt, replaced what we could replace and so far this year we’ve been able to stay in the black.”
Fieser from Florida says it costs him $18 to producer 1 CWT of milk. Dickinson from Colorado says her breakeven price is $16. The van der Goors from Michigan reported the lowest breakeven price at $15.30.
Dickinson has contracted milk out into 2016 to mitigate some risk and lock in a price she can plan for.
“We’ve contracted some milk, some corn and soybeans and have a high inventory of silage and alfalfa,” Dickinson says. “We’ve kind of hunkered down, but that’s what you’ve got to do.”
Adjusting rations to remove the most expensive ingredients, even at the cost of production, is what the van den Goors have done to help with slight margins. 
“In the last five years we were very successful at pushing our cows past 90 lbs of production, but it came at a cost,” van den Goor says. “After looking at it closely we decided to change the ration and get rid of the most expensive ingredients. In the long run we made more money with less production than we have in the past.”
All of the producers are facing labor issues and none of them are overly impressed with MPP as a risk management tool. You can read more from our Dollars and Sense columnists in the current issue of Dairy Today magazine.
