High feed prices have helped put Western dairy producers deeper in debt or into bankruptcy court, says Tom Barcellos, Western United Dairymen president and a Tipton, CA, dairy producer.
“There is not a good feed deal to be had out there,” adds Texico, NM, dairy producer Mike DeGroot, who knows several dairymen who have quit the business because they can’t afford the feed.
“The drought conditions and the resulting rising feed costs hit highly leveraged Western dairy herds particularly hard,” says Mary Keough Ledman, dairy economist, Daily Dairy Report.
Despite a stronger cull from the Western region, the California dairy herd is still 3,000 head greater in September 2012 vs. in 2011, she says. Arizona herd size has decreased by 8,000 head; New Mexico, down by 5,000 head; and Idaho and Texas, down by 2,000 head each.
“Milk prices are rebounding from spring and mid-year lows due to a slow-down in milk production growth and strong export demand. Fourth quarter margins are likely to be the highest for 2012,” Ledman predicts.
In Barcellos’ area of Tulare County, CA, which produces the most milk in the U.S., one in five dairies is in financial ruin or teetering on the edge, he estimates. Those still recovering from low 2009 milk prices or who don’t have adequate feed reserves are among the hardest hit.
He operates two farms milking a total of 1,300 cows, grows some of his own feed – including silage – and buys his grain. To spread out his risk, Barcellos also does custom fieldwork; this year he saw more grain corn harvested than usual. Some cornfields contracted to dairies for silage were harvested for grain after producers were unable to pay for them. That’s led area farmers to wonder if they’d be better off growing corn for grain initially, he says.
DeGroot’s 3,000-cow herd is fed a 50:50 grain-forage ration, the forage portion including corn silage, wheatlage, wheat hay, and alfalfa. Although low corn silage inventories have forced him to add more wheat hay, even that crop is short on supply.
“If you have to go out and procure these types of feed, you are going to pay a premium,” he points out. “They know it’s in short supply, and when that is the case you can not necessarily feed what is ideal for the cows anymore. Instead, you ‘best cost’ the ration.”
Some neighboring dairy producers have been adding grass, CRP hay, straw and cornstalks to their rations. “It’s getting pretty creative around here right now as to what guys are using in rations,” DeGroot says.
Micromanagement has been key on his operation. “We are trying to make the most milk that we can as cheap as we can and are constantly watching feed conversion.”
Forages are available, but distance is an issue. Some dairy producers DeGroot knows have bought, up to 200 miles away from their dairies, land that has the moisture to grow corn silage. It’s ensiled where it’s grown and hauled daily.
Other farmers have converted corn silage ground to drought-resistant forage sorghums, even though the higher-quality silage corn demands a higher price, the dairy producer says.
Most of the hay purchased in DeGroot’s area comes from Colorado, but as other markets have dried up, demand and prices have risen.