US Dairy Producers Bolster Margins through Genetics

Due to the record-high beef prices in 2014-15, calf and cull cow sales provided a significant boost to dairies' margins, but this bonanza has ended, Sarah Mikesell reported for TheCattleSite this week.

Dairies are now looking to genetics to bolster their margins, according to CoBank's latest research report.

"In 2016, US dairy margins are being slugged with a 1-2 punch of soft milk prices and slashed cattle prices," said Trevor Amen, CoBank Animal Protein Economist.

"Milk prices have now fallen 40 per cent from their high in late 2014. But until a few months ago, dairy producers were partially insulated from this painful decline due to record high cattle prices and lucrative sales of bull calves and cull cows."

Dairies benefited substantially from historically tight beef supplies and record high beef prices.

Now that calf and slaughter cow prices have retreated to their historical averages – down roughly 90 per cent and 40 per cent, respectively, from their 2015 highs – dairies are innovating to improve efficiencies and remain viable – click here to read more.

In market news, this week's Global Dairy Trade auction showed a reduction in the GDT price index of 1.4 per cent compared with the previous event.

UK levy board AHDB Dairy said the data suggested the market may be near the bottom, as despite the overall downward trend, price fluctuations have taken place within a much narrower range – read more.

However, farmers are still struggling with extremely low prices after further cuts.

The UK’s NFU dairy board chairman Michael Oakes said even the most efficient dairy farmers cannot survive at these levels.

“There’s no question that this is the most difficult time many dairy farmers have ever faced with milk prices far below breakeven levels,” said Mr Oakes – read more.