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Northeast Dairy Farms Still In Recovery

Northeast Dairy Farms Still In Recovery

After disastrous 2009, milk producers will still be catching up on in 2011.

In 2010, Northeast dairy farmers recovered some of the financial footing that they lost in 2009. And, milk price prospects for 2011 suggest that milk producers will do even better.

That's a quick peek at the Northeast Dairy Farm Summary report released yesterday by Farm Credit East.

The summary was compiled from 524 farms in New York, New England, and New Jersey. All are considered better than average from the standpoint of extensive recordkeeping, financial management and efficiency.

MILK PROFITS ON THE UPCLIMB: Milk prices and net earnings began recovering in 2010 and are likely to improve through this summer.

"The past few years have been very challenging," notes William Lipinski, Farm Credit East's CEO. "Profitability rebounded in 2010. We remain optimistic that dairy farming will remain a strong industry in the Northeast," he adds.

If a consensus of dairy industry economist predictions are correct, profitability will stick around in 2011. Gross milk prices in the Northeast are pegged to run in the $20 range at least through summer.

Joanna Lidback, director of knowledge exchange for Farm Credit East and author of the summary, says net earnings per cow increased $782 per cow from a minus $386 in 2009 to a plus $396 per cow in 2010. Producers were even able to catch up on bills (feed, repairs and capital purchases) carried over from 2009.

However, they weren't able to pay back much of the extra debt incurred in 2009. 2010 debt per cow stayed at $3,337 – highest in the report's 32-year history. And, compared to 2008's high, family living allowances in 2009 and 2010 dropped $41 per cow to $153 per cow – a 21% pay cut.

After dropping $5.79 per hundredweight in 2009, farm milk prices increased by $3.90 in 2010, bringing profitability back to Northeast farms.

The biggest differences came with herd size. Herds of 300 or more cows sold the most milk per cow and per worker, says Lidback. Net earnings for those larger herds were 2.7 times that of herds of under 89 cows.

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