Returns to management for milk produced in the Central milk market order declined 42 cents/cwt in March 2017 but were still positive at $1.57/cwt. The largest decline was in income with a drop of protein income. As you may know the protein price dropped during March, $-1.31555/cwt of 20,000 pound cows, but the PPD increased by $0.48/cwt. Feed costs were slightly lower but less than 1 cent/cwt. The Central Order March butterfat price was virtually the same as February's, down less than 1 cent per pound.
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Even though the butterfat price and PPD dropped in February compared to January 2017, returns to milk production in all four dairy budgets remained positive for returns to management.
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January 2017 dairy budgets net return to management increased by 29 cents/cwt compared to Dec 16 for the 20,000 pound freestall model while the 24,000 model saw a 42 cents/cwt increase. January feed costs were 17 cents/cwt higher but gross income was 46 cents/cwt higher. Total variable costs were 10.5 cents/cwt higher.
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The November 2016 dairy budgets turned out more positive than October’s. Gross income for the 20,000 pound freestall dairy budget increased by $0.23 per cwt and feed costs rose $0.018 per cwt. All together that budget had a net gain of $0.19 per cwt for a positive return to management.
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The last few years have been tough for many farmers, feeders and ranchers due to a cost-price squeeze. I reviewed the 2015 Nebraska Farm Business INC financial standards measures. Average 2015 Net Farm Income was $51,293 which doesn’t sound terrible until you get deeper into the numbers. The farms are broken into 10 equal groups, deciles, ranked by Net Farm Income. The bottom four deciles of farms were unprofitable with the lowest decile averaging -$109,508 net farm income. At the beginning of 2016, the bottom three deciles had negative working capital with the lowest decile averaging -$244,880.
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My October 2016 dairy budgets showed poorer financial performance compared to September. Gross income declined by $200.79 annually or just over $1 per cwt for the 20,000 pound freestall budget.
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Good thing milk protein price rose! The total gross income in the August 20,000 pound dairy budget rose by just over $154. The income from protein rose by $409 while the negative PPD led to $168 loss in income. Gross feed cost declined by about $161, most of that from the decline in hay prices. All 3 of the 4 budgets show a positive return to management. Only the 20,000 pound tiestall budget had a negative return to management for August 2016.
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Compared to June, the July 2016 NE-IA dairy budget showed a very good improvement. The improvement came from both increased income and reduced feed costs. Gross income rose by over $20 per month per cow and feed costs dropped by about $13.25 per cow per month. For a total improvement of $33.25 per cow per month. The higher income came from increased butterfat, protein, other solids and quality price. However, the cull cow price dropped as did the PPD. All feed prices dropped, except fat. The net improvement is $1.73 per cwt. The 24,000 pound budget showed positive returns to labor and management, $0.93 per cwt, which means the budget is paying all variable costs and fixed costs.
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Dairy farmers needing to know their income and costs per cow and per herd can use this information and the interactive worksheet to calculate their cash flow.
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