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Milk Prices Offer Producers Relief
STARKVILLE -- A second month of record high milk prices are a welcomed reprieve for embattled dairy farmers reeling from months of skyrocketing feed costs.
The record prices and somewhat lower feed costs arrived too late for more than 30 Mississippi dairies that have closed their doors since the first of the year.
Dr. Bill Herndon, extension agricultural economist at Mississippi State University, said basic formula prices reached all-time highs in August and September.
The current prices are about $15.37 per hundredweight of milk. A hundredweight is slightly more than 11 gallons of milk.
"At this time last year, producers were receiving just over $12 per hundredweight," Herndon said.
The dairy economist said U.S. milk production is about 1 percent lower than in 1995. While strong demand for dairy products continues, the nation's herd keeps shrinking -- down about 1 percent this year.
Although cows had been increasing their output each year and more than compensating for fewer numbers, several factors have prevented production improvements in 1996.
Conditions contributing to the output reduction include poor weather in several regions of the United States, high feed costs and poor forage quality.
"Cows are affected by biological conditions much like cropsin a field," Herndon said. "Cows were stressed by floods in the Northwest, a cool, wet spring in the upper Midwest and a hot summer in the South."
Herndon said producers' joys over strong prices have been dampened by high feed costs.
"Before harvest got underway, corn was close to $6 per bushel, and now it's about $4. At this time last year, it was near $3 a bushel," Herndon said.
William Oakley, a dairy farmer in Oktibbeha County, said feed prices were tremendous a long time before milk prices went up. Farmers are hoping for sufficient time with higher prices to compensate for months of costly feed bills.
"When costs are this high, we have to do a better job managing feed," Oakley said. "We've been forage testing and working with a nutritionist to provide a balanced ration. We're continuing to follow Dairy Herd Improvement Association recommendations closely."
An important aspect of the DHIA recommendations is culling poor milk producers. Since a portion of a dairy producer's income comes from culled cows and bull calves, dairymen have experienced the same market frustrations as beef producers facing weak prices.
"Three years ago, buyers were standing in line to pay $100 for bull calves; today, it's hard to find people who will pay $5 for one," Oakley said. "Culled cows that were bringing $500 two years ago are now bringing $200 to $250."
Herndon said low cattle prices have kept some people with large numbers of older cows in the dairy industry. For other dairymen who are interested in getting out of the business, strong prices for younger, productive cows make this an opportune time to sell out.