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2008 Dairy Survey

virtual dairy cattle encyclopedia of reproduction

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CornPicker for Silage Hybrids


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Michigan Milk Market Update &
Reflections on 2009


Christopher Wolf
Dept. of Agricultural, Food and Resource Economics

We all know that 2009 was an historically bad year for US dairy farms. Preliminary financial data from Michigan dairy farms start to put it in perspective. Table 1 shows summary information from the Michigan dairy farm business analysis summaries. Even though 2009 is preliminary, the values likely will not change a great deal in the final version.

Over the 9 years the average rate of return on assets (ROA), a measure of profitability, averaged 5.8%.  2001, 2004 and especially 2007 were profitable years, while 2002 and 2003 were very poor.
Last year looks to set the new low water mark for profitability with a negative average ROA. Compared with 2008, average milk price received fell $6.16/cwt while total feed costs dropped only $1.16/cwt.

While the milk price has recovered to an average price relative to the past 15 years, the milk-to-feed price ratio continues to be near 2.0 as feed prices remain high (Figure 1).

milkmarketTable

Nationally, milk production increased for a third consecutive month in May.  May milk production was estimated at 17.0 billion pounds, 1.1% more than May 2009. Cow numbers in May were 9.103 million. That value was down 171,000 from a year earlier but 4,000 more than April 2010.  Regionally, the states in the Northwest (and California) appear to be recovering by posting year-over-year production gains while in the Midwest Wisconsin (+5.8%), Michigan (+4.4%) and Minnesota (+3.8%) continued their impressive growth rate. In the Southwest the story was different as production declined in Texas, New Mexico and Arizona.
milkmarketgraph

While there is still a great deal of total cheese in inventory, stocks grew at a lower than average historic pace last month. International dairy products prices are relatively strong.

In the latest forecast, USDA raised its milk price forecast based on the expectations of higher dairy exports and lower dairy imports.

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