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Cows brought home the milk in 2015, but not the bacon

Progressive Dairyman Editor Dave Natzke Published on 10 June 2016

All the political talk about the stagnant wages for U.S. workers pales in comparison to the income brought home by the average dairy cow.

The USDA’s annual Milk Production, Disposition and Income report, released each April, estimates cow numbers, milk production per cow, milk price and total milk production for all 50 states.

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Factored all together, the report yields information on gross receipts from milk sales on a per-herd and per-cow basis. Both were down substantially from record-setting 2014.

080216 state milk value 2015

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National numbers

While U.S. dairy cows brought home less money in 2015, it wasn’t for lack of trying. More cows went to work, and they put more milk in the tank.

The annual average number of milk cows on U.S. farms was 9.317 million head, up about 60,000 head from 2014.

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Milk production increased 1.3 percent in 2015, to 208.6 billion pounds. Of that total, the USDA estimated about 969 million pounds of milk was fed to calves or used at home.

Milk production per cow in 2015, at 22,393 pounds, was 134 pounds more than 2014.

Marketings, including whole milk sold to plants and dealers and milk sold directly to consumers, totaled 207.7 billion pounds in 2015, also 1.3 percent above 2014.

Milk price, returns down sharply

Reflecting a 29 percent decline in the U.S. average milk price ($17.08 per hundredweight in 2015, compared to $23.97 per hundredweight in 2014), total U.S. cash receipts from milk marketings fell to $35.8 billion.

Combining the milk fed to calves or used at home, USDA-estimated producer returns averaged $17.21 per hundredweight. That’s about 28 percent less than 2014 and the lowest total since 2010.

The downturn is especially acute in that it followed two years (2013-2014) when U.S. cash receipts from milk marketings were the highest on record.

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The power of milkfat

With the average milkfat test unchanged at 3.74 percent, 2015 milkfat production was estimated at 7.81 billion pounds, up 112 million pounds from 2014. With weaker dairy product prices, however, the value of that milkfat took a big hit. Return per pound of milkfat was estimated at $4.60 in 2015, down from $6.44 in 2014, a 29 percent decline.

The value of a pound of milk ranged from a high of $0.285 to a low of $0.149. The top five states in terms of value of a pound of milk produced were Hawaii, Alaska, Florida, Georgia and Maine.

On the other end of the spectrum, lower milk prices and lower returns per pound of milkfat characterized the bottom five in terms of the value of a pound of milk produced. Montana had the distinction of coming in last, followed by California, Arizona, New Mexico and Michigan.

Montana suffered from the lowest average return per hundredweight in the U.S. in 2015 ($14.90 per hundredweight) and the lowest return per pound of milkfat ($4.01 per pound).

The U.S. average return per pound of milkfat was $4.60, topped by Hawaii, at $8.33 per pound.

Returns per cow, herd

Combining production and value factors, the top 10 states in terms of gross value returned per cow were, in order: Colorado, Hawaii, Florida, Georgia, Michigan, New York, Wyoming, South Dakota, Washington and Nevada.

The value of milk averaged $3,854 per cow in 2015, $1,503 less than the year before and the lowest since 2010. It was also $536 less than the five-year average.

Northwest producers collected the highest-gross milk return per cow in 2015, at $4,069, about $154 more than those in the Midwest ($3,915 per cow) and $390 more than their counterparts in the Southwest.

When herd size is added to the equation, the states leading in value of milk per dairy operation were New Mexico, Arizona, Nevada, Colorado, Hawaii, Idaho, California, Texas, Florida and Wyoming.

Looking ahead

The 2016 dairy economic picture is looking similar to slightly worse than 2015. As of May 2016, the USDA projected an all-milk price in the range of $14.60 and $15.10 per hundredweight (mid-range of $14.85 per hundredweight). With milk marketings expected to reach 211.4 billion pounds, that would yield gross receipts of about $31.4 billion, or about $3,375 per cow, nearly $500 worse than in 2015.

‘$1 billion club’ shrinks

Just 10 states topped the $1 billion mark for annual milk receipts in 2015, three less than 2014. They included California, Idaho, Michigan, Minnesota, New Mexico, New York, Pennsylvania, Texas, Washington and Wisconsin. Arizona, Ohio and Iowa fell off the list in 2015.

California and Wisconsin accounted for about $11.5 billion in 2015 cash receipts, or about 32 percent of the U.S. total. Those two states alone saw a $4.71 billion drop in milk receipts between 2014 and 2015.

The global impact

While cow numbers, milk per cow and total milk production rose in 2015, global factors had the biggest negative impact on milk prices and milk income per cow. The end of the dairy quota in the European Union resulted in increased world milk production, while the continuing embargo on dairy imports by Russia and weaker markets in China pressured demand.

A strong domestic dairy market kept U.S. dairy product prices higher, and combined with a stronger U.S. dollar relative to other currencies, made export-bound products less competitive on the world market.  PD

Dave Natzke
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