| Missouri Dairy Business Update |  |
| Volume 1, Number 4 | |
December 2001 | |
| Missouri Dairy Business Update | |
| Volume 1, Number 4 | |
December 2001 | |
The latest USDA Dairy Outlook report, November 28th, 2001 predicts the following class III prices for the 4Q of 2001 and for 2002:
The November Class III price was $11.31per cwt. As of today, December 3, 2002, if the futures market is a correct predictor, November holds the bottom for class III prices for the next twelve months. The following graph plots actual class III prices since January 2000 and then what the futures market is predicting for prices over the next twelve months.
Prices for 3.5% milk in the SE Order in Missouri and the Central Order in Missouri are estimated for the next year by adding $1.70/cwt for SE Order shippers and $.70/cwt for Central Order shippers to the class III futures.
"Dairy Profit Weekly" is reporting that Round IV of the popular Dairy Options Pilot Program, (DOPP), has been approved for next year. DOPP is a government risk management-training program that will pay for 80% of the cost of buying put options to put a floor under future milk prices for participating dairymen.
This year Dallas County in Missouri has been added to the list. That will make the following 13 counties in Missouri eligible for the program: Barry, Dallas, Douglas, Greene, Howell, Laclede, Lawrence, Newton, Ozark, Polk, Texas, Webster, and Wright.
Dairymen in those counties will be notified late next spring about the opportunity to participate in the program. Meanwhile, anyone wanting to learn more about it may check out the DOPP Website
http://www.rma.usda.gov/training/programs/dopp/doppq_a.html
Or the University of Wisconsin has a nice training web site about dairy risk management:
http://www.aae.wisc.edu/future/
In 1950 Missouri contained almost a million dairy cows. Today that number is 140,000. The following map shows which counties lost their dairy cows, (White), and which counties kept their dairy cows, (Green). Counties with the darkest green kept 100% of the cow numbers they had in 1950. In many of the counties, the numbers dropped and then rose again in the 1970's and 1980's. Still it makes an interesting picture.
The following dairy budget for 2002 presents estimated costs and returns for dairymen in Missouri next year. The 17,500 pound expected milk production is close to our October statewide DHIA average of 17,507 pounds of milk.
The price of $12.60 reflects the net milk price net after hauling, advertising and all the other deductions are made from the milk check. This year the cost of raising the heifers is included in the budget also.
17,500 lbs milk, with cost of raising replacements included.
| Estimated Income | Price | |
| Milk Sales (Price in $/cwt is NET of hauling, promotion, advertising & capital retain) | $12.60 | $ 2,205 |
| Cull Cow Sales 36% total cull rate, 32%sold. 4% death rate. | $ 130 | |
| Young Stock Sales | $ 55 | |
| Misc. Income (Gov. program, coop dividends, etc) | $ 25 | |
| Total Gross Receipts | A | $ 2,415 |
| Estimated Operating Costs | Per Cow | |
| Feed (Including waste) | ||
| Lactating Cow: Forage | $ 357 | |
| Concentrate | $ 618 | |
| Dry Cow (Forage & Concentrate) | $ 90 | |
| Heifer Raising (Forage & Concentrate) | $ 350 | |
| Total Feed Costs | $ 1,415 | |
| Veterinary and medicine | $ 88 | |
| Other livestock material & services: (breeding, DHIA, BST, Supplies.) | $ 230 | |
| Dairy equipment & machinery costs: milking equipment repairs, feed prep, manure handling, (does not including forage production costs) | $ 120 | |
| Utilities | $ 45 | |
| Other (insurance, real estate repairs, misc.) | $ 67 | |
| Operating Interest (1/2 Operating Costs X 8%) | $ 79 | |
| Total Cash Costs Except Labor | B | $ 2,044 |
| Income over all Operating Costs except labor | A-B | $ 371 |
Tax Time
Anyone looking for a good easy to read reference on the latest changes in the tax code and their impact on farmers can download this 31 page extension publication "Tax Planning and Management Considerations for Farmers in 2001" from Purdue's website:
http://www.agecon.purdue.edu/ext/pubs/taxplan2001.pdf
Central Order Pooling Hearing Transcripts
The transcripts of the hearing held Nov. 14th and 15th regarding changing the pooling regulations for the central order are available at:
http://www.ams.usda.gov/dairy/central_pooling_standards.htm
Prepared by Joe Horner, Dairy and Beef Economist, Commercial
Agriculture Program, University of Missouri. To contact Joe, call 573-882-9339,
or e-mail hornerj@missouri.edu.
All copies of this publication are accessible through AgEBB.
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