Dairies coping with high cost of feed

January 28, 2011 

SUN-STAR FILE PHOTO BY LISA JAMES Simon Vander Woude, part owner of the family-owned Vander Woude Dairy in Merced, stands with his cows Dec. 3. Feeding livestock is getting more expensive.

Dairymen struggling to recover from low milk prices in 2009 and 2010 have been reeling from high feed prices that threaten to run many out of the business.

"Feed prices are extraordinarily high, the second-highest ever, after the spring of 2008," said Joel Karlin, a market analyst for Western Milling in Goshen in Tulare County.

Those in the know point the finger directly at high corn prices as the cause of escalating feed prices. Corn, which is a key ingredient in the dairy ration, has gone from $176 a ton in July to $276 a ton this month, Karlin said. That's a 57 percent increase.

Dairies depend on three types of feed. Half is forage, which is usually alfalfa hay and corn silage. The other half is divided between corn and protein meal, usually canola or soybean meal.

"All of those components have seen higher prices," Karlin said. When corn prices go up, producers look to other feeds to take its place. Because of the increased demand, prices for hay, silage and other feedstuffs go up."

Part of the problem is that corn prices have been driven up by the ethanol subsidies paid by the government, according to Mi- chael Marsh, chief executive officer of Modesto-based Western United Dairymen.

"The ethanol subsidy has to go away," Marsh said. "Dairymen are struggling mightily. Their milk prices came up a bit, but at the same time feed costs are keeping producers underwater financially."

Other livestock producers are also affected by the high corn prices, Marsh said, including poultry, dairy, swine and cattle operations.

Marsh said dairy producers are trying to reconfigure their feed rations, to make the most cost-effective feed for the milk they produce. "Everybody's doing that. It's hard to find a place to cut anymore."

Marsh said the subsidy for ethanol producers, who use corn to make fuel, is only in the United States, which makes American farmers less competitive in the global marketplace. "Congress has to step up to the plate and reduce the deficit and keep livestock production in the United States," Marsh said.

If producing milk continues to be unprofitable, Marsh said, he believes American consumers will be buying milk from China, instead of the other way around.

Reporter Carol Reiter can be reached at (209) 385-2486 or creiter@mercedsun-star.com.

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