payment

For the dairy folks and/or beef folks with questions about udders, milk and mastitis.
farmguy
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payment

Postby farmguy » Sun May 27, 2018 6:35 am

An Amish neighbor was over today and we talked about the low milk price. He said there was a govt payment when price was low and feed was high. He also said Amish do not take that payment but I was wondering about it, rate etc.? I grew up on a dairy farm but this is new to me. This was big dairy country at one time. Friends of ours just had a sale. They were top producers, milked 3x a day, active in the community and received many awards yet after 25 years of dairy they said they broke even with their creditors. I know the dairy industry is hurting, farmguy.
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Re: payment

Postby bbirder » Sun May 27, 2018 7:11 am

I hear this more and more. The Dairy industry was big here also when I was young, but I do not believe I could find a dairy today within 100 miles. Makes me wonder.....With the population growing, where does all the milk come from to furnish the food stores?
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Son of Butch
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Re: payment

Postby Son of Butch » Sun May 27, 2018 12:25 pm

New subsidized milk program "milk price insurance" kind of like crop insurance, but you're buying insurance on prices.
Varying amounts of coverage offered depending on how much insurance a dairy farmer wants to buy, highest coverage
Costs farmers 15 cents per hundred weight produced and insures a price of $8 hundred weight over feed costs.
i.e. Farmer shipping 10,000 lbs of milk per day the insurance costs $5,475 year.
Must be enrolled in the program by June 1st to purchase the insurance.
Considered a no brainer for farmers milking less than 250 cows.
The larger dairies can often insure their price margins cheaper using future markets puts and calls.
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Son of Butch
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Re: payment

Postby Son of Butch » Sun May 27, 2018 12:50 pm

Local supermarket prices
Whole milk $3.49 gallon
16.9 ounce bottle of water 59 cents = $4.47 gallon
16 ounce bottle of citrus flavored water 89 cents = $7.12 gallon

16 oz bottle of water purchased at Minnesota Twins baseball game $5 = $40 gallon
purchased at Boston Red Sox game in Fenway Park $4 bottle = $32 gallon
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Re: payment

Postby Stocker Steve » Mon May 28, 2018 12:22 am

Dairy cow numbers are steady and production per cow is up.
Lots of family producers are going out, but another 10,000 cow mega dairy will replace a number of them.
Organic milk was supposed to be the solution (many Amish do this) but now there is regulation and consumer push back in this market.
So another "get big or get out" factory farm situation. Insurance could help, but I do not see how this would be a long term solution. Do you seen a bright spot for dairy Butch?
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Re: payment

Postby TexasBred » Mon May 28, 2018 8:03 am

Purchasing milk futures has been available for almost 30 years but most are too skiddish to get involved in it. A good way at least know what you're milk price will be before you ship it out. Most would rather ship today adn find out their price next month then pay the shipping.
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Son of Butch
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Re: payment

Postby Son of Butch » Mon May 28, 2018 10:06 am

Stocker Steve wrote: Do you see a bright spot for dairy Butch?

No.
Do the math, you can't come out ahead when you calculate how many 59 cent bottles of water a cow drinks to
produce a gallon of milk. :)
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Re: payment

Postby Till-Hill » Mon May 28, 2018 11:32 am

Son of Butch wrote:
Stocker Steve wrote: Do you see a bright spot for dairy Butch?

No.
Do the math, you can't come out ahead when you calculate how many 59 cent bottles of water a cow drinks to
produce a gallon of milk. :)
haha, that is a good one. There is no money in dairy farming right now. This insurance deal is a joke but we had too. Work this hard for nothing really makes a guy wonder what the heck we are doing.
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Re: payment

Postby Stocker Steve » Mon May 28, 2018 11:51 am

I think you need to back calculate how the mega dairies are making money, and that will provide some clues.
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Re: payment

Postby Till-Hill » Mon May 28, 2018 1:29 pm

Cheap help, very efficient parlors and feeding systems. Just to name a few why big boys can out do is little guys
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Re: payment

Postby Son of Butch » Mon May 28, 2018 1:49 pm

Economy of scale.
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Till-Hill
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Re: payment

Postby Till-Hill » Mon May 28, 2018 2:49 pm

Son of Butch wrote:Economy of scale.

Exactly!
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Stocker Steve
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Re: payment

Postby Stocker Steve » Mon May 28, 2018 3:08 pm

Son of Butch wrote:Economy of scale.


Half right.

They buy 80 acres, pour 40 acres of concrete using their own construction company, import 10,000 heifers, and feed them corn silage contracted in for less than the total cost of production.

So efficient processes, vertical integration, and a very keen understanding of ROE financials.

My banker brought up the fact that they are still expanding in our area. I asked if they were getting a deal on interest rates. He then changed the topic...
Last edited by Stocker Steve on Mon May 28, 2018 7:37 pm, edited 1 time in total.
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Re: payment

Postby Dave » Mon May 28, 2018 5:48 pm

Size isn't the entire answer. There is a 30,000 cow dairy near here that is going down. His lawyers and the bank are doing battle. The out come is more about how it will be sold. The bank's main point is that he lost his contract and has to find a new home for the milk the first of the month. Tough to find a plant to take the milk from an additional 30,000 cows. The farmer has two other dairies in California in the 10-20 thousand head range.
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Re: payment

Postby Stocker Steve » Mon May 28, 2018 7:32 pm

If corn ever gets expensive for several years, and there are still some family diaries left, then the Midwest mega buy all your feed dairies will be in trouble.

What do they use for dairy feed in Washington state?
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