The economics of low milk price

For the dairy folks and/or beef folks with questions about udders, milk and mastitis.
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regolith
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The economics of low milk price

Postby regolith » Mon Mar 02, 2015 4:17 am

I thought this might be of interest to some of you who aren't all-grass producers.

I can't say NZ dairy farming is mostly all-grass any more - the recent drought years have pushed a lot of dairymen who normally wouldn't buy feed, into buying it. And once they start they generally don't stop, even when the milk income drops as it has done this year. Chasing production numbers gets addictive, I guess.

We're not in a drought (yet) in this area, just an extended dry spell that has been reducing grass growth rates for the past several weeks. I culled down to my winter numbers and dried off the lightest 2 yr olds in January. Following discussion with the farm owner and farm consultant today the decision has been made not to purchase any feed. We have a small amount of silage and hay that was made on-farm.
In other words, if it doesn't rain in the next week or so me and the cows are going to have a long winter holiday.
We've already done the normal annual production (to May 31st) for this farm, and could come very close to breaking last year's record production if I was able to keep the remainder of the cows in-milk through April. Calving again in July.

This is one of the challenges of sharemilking - both parties share the milk income and the costs of purchased feed, so any such decision is by mutual agreement. In this instance, we're both on the same page, so no problems.
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bigbull338
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Re: The economics of low milk price

Postby bigbull338 » Mon Mar 02, 2015 7:45 pm

the way yall dry your herds off for 2 or 3 months a year.you have to ask yourself the question will milking the cows another 30 to to 90 days make a profit putting feed into them.
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Re: The economics of low milk price

Postby regolith » Tue Mar 03, 2015 3:13 am

bigbull338 wrote:the way yall dry your herds off for 2 or 3 months a year.you have to ask yourself the question will milking the cows another 30 to to 90 days make a profit putting feed into them.


At a $4.70 milk price there's not a lot of margin in buying feed to produce milk. Some of the guys that have geared up with housing and equipment to feed full rations reckon they need more like $6 to break even.

I put the cows on once a day milking nearly a month ago and we lost 10% of the daily production doing that, but we can still come out ahead financially from labour and electricity saved... and in the long run, it's possible to hold production better on 1xday in tight conditions as the cows are saving energy and holding condition better.
Just frustrating when you know you've got good cows that can do the production but they're either dried off after 180 days in milk or wound right down in feed through the late summer if it doesn't rain. I reckon the first good autumn following an average spring on this farm I'm going to get another 7% on top of last year's record production, on all grass. With feed there's no telling how high it could go, I've got a few cows now that can do 550 kgMS on short lactations, all grass.
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bigbull338
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Re: The economics of low milk price

Postby bigbull338 » Tue Mar 03, 2015 10:03 am

yes your in a tough spot.what does your milk price add up to in U S $/100 of milk.we milked for years with $12/100 milk and $8/100 feed.we was real happy when the price would go up for a while.
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Re: The economics of low milk price

Postby regolith » Tue Mar 03, 2015 12:10 pm

Takes a bit to calculate that... might have to wake up.

1cwt is 100 lb liquid milk, right? That would be 45 kg in weight. We're currently producing 10.5% milk solids (fat plus protein) so it takes 9.5 litres to make 1 kgMS, or 4.7 kg out of 100 lb = $NZ22 Current exchange rate (Feb 23rd newspaper) is 75 cUS to the dollar so nearly $US17/100 lb liquid.

Corn comes to about $US20/100 lb ($NZ575/ton, usually about another $30/ton delivered on-farm), PKE is a little over half that but difficult to get without a pre-arranged contract right now. Any mistakes in the calculations are mine. Interesting to see what it comes to as a direct comparison.
I would've fed some of the hay to the milkers in April and bought more later, but the farm consultant reckons hay is 50c/kgDM and too expensive to buy. For comparative feed value that would make you just as well off buying corn as hay?? especially if you end up with someone's over-mature weedy crop.
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bigbull338
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Re: The economics of low milk price

Postby bigbull338 » Tue Mar 03, 2015 5:59 pm

then your making good money for your milk your corn price is high according to ours.but you have to probly import alot of your corn if not all.so i can understand yall being a grass only operation.
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Re: The economics of low milk price

Postby JWGrant » Wed Mar 04, 2015 10:12 am

Just took a nickle hit on milk prices here. This is going to be tough on producers.
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Re: The economics of low milk price

Postby Stocker Steve » Wed Mar 04, 2015 1:24 pm

Since calf prices were dropping - - I dried off most of my beef cows in early January.
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