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Veteran Advisor
Posts: 4,351
Registered: ‎02-10-2013
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Got milk ?

At meeting yesterday, data showing, after many
Years otherwise, that there is a neg return on
Each cow.
Organic was looking like $600.
Our local milk price is 3.85 per gallon.
I've noticed when I went to Walmart...one
Was $1.39 another $1.19 a gallon.
Even with volume, how can you sell for
That (unless used as loss leader).
Dairy is a big user of concentrates (grains).
It appears those final smaller producers will
Be flushed out with these economics...so
Are the big dairy harder to get along with
And thus pay less for grains, futher depressing
Prices.
An interesting little note, organic milk slipped
A little in demand, with milk advertised as no
Hormone, and cheaper than organic, increased
Sales
Veteran Advisor
Posts: 4,847
Registered: ‎05-13-2010

Re: Got milk ?

Dairy  is  full  speed  ahead  on  an  integrated  path  -  selling  out  -  so  sad ,  on  hogs  and  chickens  trail  -   -  - 

Honored Advisor
Posts: 18,036
Registered: ‎05-13-2010
0

Re: Got milk ?

I picked up a gallon of Kemps skim yesterday at a smaller, high priced grocery store, it was $3.19.  We buy only the name brands of milk, it`s worth just a little more not to be having "thoughts" with every sip I`d take from the generic cheap stuff.  Smiley Happy  

 

I don`t know any small dairies, about the smallest has 1,000 cows and that`s considered small these days.   I think you have to have 6,000 + cows and get contracts to stay in business or go organic.   Whether it`s hogs of dairy, if you want to farm the way you did in the 1970`s, you have to produce for a niche market.   And if you want to get big, you better know what you`re doing because when you`re big, there`ll no longer be any small mistakes. 

Veteran Advisor
Posts: 4,847
Registered: ‎05-13-2010
0

Re: Got milk ?

In  my  other  working  life , I  was  amused, or  say  taken  back  by  my  competitors  mind  set ,  if  this  don't  work,  I'll  just  file  or  let  the  bank  have  it,  and  move  on  -   -   -

 

Seems  that  mind  set  has  gained  in  popularity,  get  big  or  go  home ( get  outa   my   way ) ,  and  let  someone  else ( Taxpayers)  clean  up  the  mess   when  the  walls  crumble   -  -  -

 

BA -  your  last  sentence  is  a  master  card ,  priceless ,  statement   -    -    -

Honored Advisor
Posts: 8,931
Registered: ‎07-18-2011
0

Re: Got milk ?

If there is no way to win small, how is going big a mistake if it is the only chance at survival.
Where is the risk?

Technoligy and fiscal fed policy has taken us there. We been talking about it for several years.
Honored Advisor
Posts: 18,036
Registered: ‎05-13-2010
0

Re: Got milk ?

As far as farming, unless you`re already big or lucky to`ve been born into a 10,000 cow dairy with a pretty sign at the end of the manicured driveway "Hilltop Dairy Est 1835" and pa one day throws you the keys to the operation after your stint at Sanford University, it`s maybe late to get the itch to expand your way to prosperity.   Or some would say "now is the perfect time to expand, run while everyone else is walking!" ....I don`t know though, I`m afraid "this time" really is different, some of these big dairies have a $13 breakeven milk price and maybe a freshly signed $18 milk contract with Blue Bunny. 

 

Thing is, if you`re milking 100 cows in a family operation and losing money, you have a lot of options: Sell the cows and crop farm, take a town job, rent more cropland and crop farm, get into hogs...just endless combinations of choices.   However, if you have 1,000 cows running your tail off managing things, going to 6,000 cows borrowing more money in a $15 milk environment, hoping that 6,000 cows will bring you a $18 Blue Bunny contract.   What if Blue Bunny says "we got enough $18 milk already contracted, but we`ll give $15.50"  taking a part time $12/hr job as cashier at Caseys won`t make up for that. 

 

Then what if you bacteria count is too high, milk is rejected and you can`t get a handle on bringing it down?  The 100 cow guy can haul `em to Waverly on Tuesday and become a official crop farmer on Wednesday.   But if you have 6,000 cows you are committed to throwing big money at every problem until it goes away.  I`m not wired for the latter, but then again I look for all the exit signs when I enter a building...and I wear both a belt and suspenders  Smiley Happy 

Senior Contributor
Posts: 1,025
Registered: ‎11-30-2014
0

Re: Got milk ? supposed Economy of Scale

Can end up losing money very efficiently too.

 

as far as the Big Dog mentality of simply lasting out thus ending up owning more market share mighta worked for standard oil back in the day.

 

When there is no more market share, that " day " is now over.

Honored Advisor
Posts: 18,036
Registered: ‎05-13-2010

Re: Got milk ? supposed Economy of Scale

So this is where we`re at in production agriculture, the biggest volume input buyer and biggest production seller is automatically the most profitable?   Milk is milk, corn is corn, pork is pork just whoever does the most volume is the only one that captures the small profit. To hire the cheapest labor, to have the cheapest feed of blended out of condition corn, potato chips, donuts that are out of date, wheat straw and DDGs all mixed in a tub grinder to get the desired protein levels in the ration. And then have the largest volume to contract at the best possible selling price. 

 

Having feeders properly adjusted to eliminate waste is no longer "good enough" you have to have the animal unit numbers that you need hired labor to fill those feeders, then have the cheapest labor costs.  No, what could possibly go wrong?

 

 

Veteran Advisor
Posts: 4,847
Registered: ‎05-13-2010
0

Re: Got milk ?

sw  -  yes ,  and  those  folks  from  the  e-con-omic   development  club,  can  help  you  master  your  business  venture  of  basket  trinket - jelly- jam  franchiZ -  -   -

Your  double - doctorate   in   basket  weaving  can  go  to  town,  and  provide  extra  '' talking  points ''  at  the  ''' land  grant  '''   rural  development  lecture  - - -     

Veteran Advisor
Posts: 4,351
Registered: ‎02-10-2013

Re: Got milk ?

Well....here is the ugly truth...last year finpack
Data showed conventional dairy lost $38 a head,
Organic $600 profit per head.

Some of the small dairys make their own integration..
But usually small...they produce their own milk,
Cream, butter, cheese even ice cream.

These make even more per head.

But most today wouldnt do it, because it doesn't
Have air conditioning cab with surrounded sound
Stero.