Despite lower feed and energy costs, dairy farm losses mount

Hoard's Dairyman: 

Despite lower feed and energy costs, dairy farm losses mount

Date: 
Mon, 05/17/2010

Now that the tax filing season is complete, farm accounting reports are beginning to be compiled and distributed to the dairy world. Those reports only quantify what we already know, 2009's losses were much higher than the previous year.

One of the early reports published was completed by Frazier and Frost, a certified public accounting firm. Their clients in California, Arizona, Idaho, New Mexico, and the Texas Panhandle produce over 4.2 billion pounds of milk with some 231,000 cows . . . that's about 3 percent of the U.S. market.

California's San Joaquin Valley dairy farms were hit the hardest with losses of $962 per cow in 2009. At $585 per head, New Mexico farms lost the least amount of money for those tracked by the accounting firm. Losses for their dairy farm clients went up between $426 in Southern California to $1,284 per head in Idaho, compared to the previous year. The average was $860 for the five states. On a per-hundredweight basis, losses ranged from San Joaquin's $4.43 per 100 pounds of shipped milk to New Mexico's $3.05.

Feed costs actually fell for all regions except the Texas Panhandle where feed costs rose $276 over 2008. Among all regions, feed prices fell $476 in Southern California; $244 in Kern County; $156 in New Mexico; $143 in the San Joaquin Valley; $125 in Arizona; and $41 in Idaho.

As a result of negative cash flows, milk production fell in most regions, compared to a year earlier: 4.9 pounds in Southern California; 1.6 pounds in Idaho; 1 pound in California's Kern County; 0.5 pound in the San Joaquin Valley, and 0.3 pound in New Mexico. Milk production went up 1.3 pounds in Arizona and 1.9 pounds in the Texas Panhandle.

Low pay prices also directly impacted replacement prices. The actual 2009 replacement prices (with the drop from the previous year's price in parenthesis) are: Kern County, $1,505 ($295); Southern California, $1,490 ($860); Texas Panhandle, $1,448 ($377); New Mexico $1,378, ($225); Arizona, $1,377 ($810); San Joaquin Valley, $1,330 ($517); and Idaho, $1,290 ($365).

Click here to download a complete copy of the report.