 "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.
"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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