"Milk prices at the farm gate will decline over 30 percent, or
$5 to $6 per 100 pounds," said Mike Hutjens. "In November of
last year, the price per hundredweight was $19. By the end of
this month, it may drop to $13.
"The reasons for this decline include the recession in both
the U.S. and world dairy economies, a stronger U.S. dollar, a
decline in eating out, and less export of dairy products."
Hutjens recommended five strategies for dairy managers to
consider.
"By lowering feed costs, producers may be able to replace
$1.50 per hundredweight of the price drop," he said. "Explore
the use of byproduct feeds to reduce feed costs with the target
9 cents per pound."
Maintaining milk yield and milk components is also important.
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"Strive to increase quality premiums to increase returns," he
said. "Finally, sign up for the Milk Income Loss Contract, MILC.
It can provide $1.20 to $1.50 per hundredweight. For smaller
herds with less than 120 cows, up to 2.9 million pounds of milk
qualifies for the program support."
At the dairy case, consumers may see a price drop of 50 cents
per gallon as dairy farmers receive 5 to 6 cents less per pound
of milk -- there are 8.6 pounds of milk in a gallon of milk.
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"Cheese prices could also drop 50 cents a pound, and butter could
decline $1 per pound," he said.
But, as he noted earlier, difficult times lie ahead for dairy
managers.
"With today's current milk prices and input costs, Illinois dairy
managers could lose $100 a month per cow," Hutjens said. "The
average Illinois herd size is 102 cows, representing over $10,000
loss per month.
"It may be this summer before milk prices increase and return to
break-even prices."
[Text from file received from
University of
Illinois Extension]
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