Loss of MILC Payment Hurts Dairy Budgets

Even though feed prices have stabilized and milk prices improved, Midwest dairy budgets are still declining.

“The main reason for the decline is that no Milk Income Loss Contract (MILC) payment is projected for the month of September,” says Robert Tigner, University of Nebraska Extension dairy specialist. “Without the MILC payment, the model budget did not meet all variable costs.

“The negative PPD in the Central Order also contributed to negative cash flow,” says Tigner.

Tigner’s budgets, which include replacement costs, show Midwest herds that average 20,000 lb. of milk per cow were 75¢/cwt short of covering even variable costs in September. Herds that produce 24,000 lb. of milk per cow were at least covering variable costs by $1.

The September milk price used in the budget was $19.28/cwt. To cover all budgeted costs, the milk price will have to rise to $22 to $25/cwt.

Feed costs used in the budget: Corn, $7.65/bu; soybean meal, $449/ton; cottonseed, $395/ton, and hay, $275/ton.