The U.S. Department of Agriculture’s most recent report on the cost of milk production shows dairy farmers in the Lone Star State are losing more than $4 for every 100 pounds of milk they squeeze out of their herds. If there’s any silver lining to this dark cloud, it’s that it could be worse — the estimates for all states shows U.S. farmers, on average, lose $5.74 cents per hundredweight.
The report, released in May by the USDA’s Economic Research Service, finds that farmers in the state and elsewhere in the nation initially realize a profit based on gross value of production vs. operating costs. The total value of production, which includes milk sold, cattle sold and “other income” (for example, renting stock or space to other operations, or the fertilizer value of manure production) in Texas was estimated at $20.26 per cwt, with $17.66 of that figure from milk sales. Nationally, the figure totaled $21.20, including $18.64 from milk sales.
Operating costs totaled $17.5 in Texas, according to the estimates, and $18.95 nationally. For Texas farmers, that number included $14.61 in feed costs ($10.86 of that from purchased feed), while the remainder stemmed from such expenses as vet fees, fuel and electricity, “custom services,” etc. The estimates for all states included $15.74 in feed costs.
Subtracting operating costs from gross production value would seemingly leave dairy producers in Texas $2.71 in the black, versus a national estimate of $2.25.
But as any farmer or rancher well knows all too well, operating costs are only one part of the expense ledger. In addition to the immediate operating costs of $17.55 for Texans, each 100 pounds of milk produced also incurs another $7.02 in allocated overhead — costs such as hired labor, wear and tear on machinery and equipment, taxes, insurance, etc. The estimated overhead nationally was even higher at $7.99 per cwt.
Taking that all into account, the bottom line means Texas dairy farmers spend $24.57 to produce 100 pounds of milk, or a loss of $4.31 per cwt. Nationally, the total cost is estimated at $26.94, for a loss of $5.74 per cwt.
Darren Turley, executive director of the Texas Association of Dairymen, recently told Country World that “dairy farmers are still in very dire straits.” He said the margin insurance provisions in the since-defeated farm bill could have provided some much-needed stability for dairy farms.
“What we saw with the farm bill last week was a dismal loss,” Turley said days after the bill failed in the U.S. House of Representatives.
Even more tragic was the fact that the failure to pass the farm bill had nothing to do with the men and women of agriculture — the real war was over political battles dealing with how much to cut from the food stamp program.
It may be coming to a time, Turley suggested, that a farm bill won’t pass until the food assistance issue is separated from the agriculture provisions
Meanwhile, troubling times linger for dairy producers.
“We lost 20 percent of our producers in the last two years, and that trend continues,” Turley said. “The producers who have made it have been very creative and very efficient.
“I wish I could say there was a bright light at the end of the tunnel, but we’re not there yet.”