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Veteran Advisor

From the parlor pit 7-13

Well NMPF got what it wanted and all us small to midsized dairyman just got bent over royally.  I lifted this from another blog (thanks Rusty)

 

Contained in the dairy section of the new and improved fix all farm bill, which NMPF wantspassedquicklybeforeeverybodyfindsoutwhatmargininsuranceisreallygonnacost, is the formula for figuring feed cost per cwt of milk.

1.0728 x corn price per bushel

.00735 x bean meal ton price

.0137 x alfalfa hay ton price

Using today’s closing prices on the CBOT, and a (conservative?) price on hay of $250/ton, it works out as follows:

Corn at $7.61 x 1.0728 = 8.16

Bean meal at $ 482.20 x .00735 = 3.54

Alfalfa hay at $250 x .0137 = 3.425

That totals $ 15.12 per cwt feed cost.

Use this formula to plug in your own numbers and see what you get. In all the discussion of costs and margins, feed is the only thing mentioned as if it was the only operating cost, and the only cost that needs to be met.

Sorry, but a $13.55 class 3 price doesn’t even touch the feed, much less anything else.

 

Yepper Interesting times ahead.  

 

Just so you know after my deducts for hauling,CO-OP dues, advertising check off and other fugly stuff I got 14.65 last month for my milk.

 

HMM 60 cents in the red. Wonder what this month is gonna be like?

 

BUt don't worry crop guys this won't lead to demand destruction! Robot Mad

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16 Replies
Senior Contributor

Re: From the parlor pit 7-13

Don't you grow alot of your feed usage or don't you farm enough to cover your needs? Just wondering cause you should have a upper hand compared to these BTO that don't raise what they need for the cows. Or do they get subsidized a little better then the small time dairy?
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Re: From the parlor pit 7-13

I was thinking about this in regards to the "how bad will 2012 be" thread in the business section.

 

Recently driving through an area with a lot of family owned 2-600 cow dairies. I assume that most have gotten by the last few years with the fact that their homegrown feed costs are considerably lower than the market. They'll be buying a lot of feed next year.

 

I suppose that crop insurance also helps them some but clearly not to the same degree as the straight up croppers.

 

I've been told (unsubstantiated) that the Farm Credit system has as much as $5000 per cow in at least a few of those operations.

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Advisor

Re: From the parlor pit 7-13

Sell the cows and save your equity now!!!  Been there in the late 80's

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Honored Advisor

Re: From the parlor pit 7-13

425cat: Might be good advice, right now his hay and whatever grain he raises have value to some other slow learner. I understand there is a "farmer/cattleman in NW Ks in need of fence posts ... even if they are wood.

 

Right now I am in Iceland doing a bucket list thing and learning and seeing things pictures just do not do justice to.

 

Dairy is struggling most places in the world. It is heavily subsidized and or controlled in many parts of the world under the umbrella of food security. Here in Iceland it is no different and in Great Britain the general financial mess of the economy is taking it's toll of farmers subsidies as well.

 

Here the cows are grass fed as their almost exclusive diet. No Alfalfa, no grain to speak of. The dairy family we stopped and saw gave us a first class look at their operation and the dairy was clean, neat, and organized. The top cow was @ 8500 liters a year most a ways under that. They have a "quota" system as well. I would love to ship them a container of "maize" as they call something else "corn".

 

All these cows here get is baled grass hay that looks a lot like a type of blue grass. All hay is plastic wrapped as soon as baled if not part of the baling process it's self. 50% of the farmers have a baler that is a baler and wrapper in one, the rest bale and someone else is following them around in the field wrapping them as fast as they are made. Not net .. Solid 100% wrapped. I will post some picts if anyone is interested upon my return to my reality and hot dry home.

 

Btw I did the get out business of the hog thing in 1986. Was easier than I thought it would be. Had done it for 22years.

 

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Senior Contributor

Re: From the parlor pit 7-13

Sometimes you just have to cut your losses sooner then later. You might be better off making more money getting rid of them them and keeping your grain to sell to someone else that wants to lose money. I know it is not easy being a dairy man, cause you are married to them animals day an night and there is no reward at the end of the tunnel.
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Honored Advisor

Re: From the parlor pit 7-13

I don`t know much about industrialized animal agriculture.  What I do know is a group was going to start a small dairy(6,000 cows) and when word got out Blue Bunny and other companies were knocking on the door to get contracts, so these what I call big dairies...who knows how much they recieve? they may have a price tied to their inputs, the final product will just get raised at the supermarket.  And like in the case of Sparboe eggs, when corn went up they had a little note bashing ethanol in the egg aisle, but poor babies that didn`t stop them from having to raise the egg price boo hoo hoo hooSmiley Sad  I`m sure it`s the same deal with big hog setups.  The integrater signs up farmers to finish hogs for "$8 +manure"  and if the integrator can`t come to terms with Hormel or Tyson the farmer finisher can just figure out how he will make payments on buildings that are only half full.  Hormel sooner or later will convince Walmart or HyVee that if they want pork they will have to "pay up".  Bottomline is who knows what demand destruction will occur?  No one really knows whats in the contracts that 95% of the pork is raised in and whatever in milk contracts.  That`s what the little guy is faced with today.  If there`s a need for extra milk or meat the companies will take it off their hands at market prices, but contracts come first. 

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Veteran Contributor

Re: From the parlor pit 7-13

My dad once told me be careful of the livestock, the government will take care of the grain farmer but they don't give a **bleep** about livestock guys. After telling me this I still raised hogs in fact bought a farm with the profits and the when these high feed costs hit, I scaled way back and am darn glad I have a big landbase. Oh I still raise hogs but I only buy them when I can lock in a profit. Every farmer has to ask himself is this worth it-in case of dairy I know its been a struggle but farming is a business and if its not holding its own your better off going out on your terms. Dads right the crop guys will be taken care-its not right but we don't make the rules. All we can do as mgrs is farm the system.

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Veteran Advisor

Re: From the parlor pit 7-13

Heard that for years.

 

BTW checked at the local elevator COrn is 13.50 a CWT.

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Veteran Contributor

Re: From the parlor pit 7-13

Then why milk cows

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