Saturday, March 8, 2014

Milk price, production comparison tool

Dairy producers are often exposed to not only the highly variable nature of milk Super Sale, but also the highly variable costs of the feeds they supply to their herds. This variability often creates a situation where dairy farmers are tasked with making many choices affecting milk production and feed costs without being able to visualize the outcome.

Milk price is affected by several factors including milk volume, milk components (fat, protein, and other solids), and any bonuses or deductions applicable to the producer. While milk volume is important, many of the performance indicators of today's industry overlook the value of a herd with slightly lower milk volume and higher solids. Additionally, feed choice may have an impact on milk volume or solids. The effect of using different feeds to boost milk volume or milk solids is not only hard to calculate, but also to compare and contrast.

An example of this situation would be a farmer making the decision to spend more money on new feeds to boost component production. If this feed were to increase the production of milk solids, it may be more economically justifiable than the current feed, even if it costs more. This new feed could be more economically justifiable if it increased milk components, milk pay price, and income over feed cost values.

In order to visualize and quantify the economic impact of changes to milk volume, milk composition, milk price, and feed costs to dairy farm profitability, the University of Kentucky and DFA have developed a dashboard tool. This tool can be found at:

This tool allows farmers to quantify the difference slight changes in milk production and component levels could have on milk price. An additional feature of this tool is to compare feed costs, and their impact on milk income. Within this tool, you will find places to input production values, milk check values, and feed costs. From these inputs, economic values are computed, giving a better picture of the viability of herds with varying milk prices and feed costs.

In short, this tool will then allow you to:

  • Calculate your milk price
  • Compare possible production scenarios and their effects on milk price
  • Compare income over feed costs between different production and feed cost situations

The arrows on the following pages will help to direct you in using the actual Milk Price and Production Comparison Tool. While the arrows in the following pages will not appear on the actual tool, using these pages as a guide will assist you in utilizing each element of the tool to its fullest potential.

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