Milk output drops only 1.1% as per-cow production climbs

By CAROL RYAN DUMAS
Capital Press

While U.S. milk cow numbers in October were down 236,000 head since the first of the year, milk production nationwide was only down 1.1 percent from October 2008.

That's because milk per cow is up, said Wilson Gray, extension livestock economist with the University of Idaho at Twin Falls.

"I think partly because milk prices have improved a little bit and feed costs are down, people are putting better feed into cows," he said. "People can probably afford to put a little more energy in feed rations to generate more income."

That better production is partially offsetting the reduction in numbers, he added. And with new-crop hay and corn silage, the feed is fresher and of higher quality.

Adding to the production mix is that producers who were culling over the past year were getting rid of their lower-producing cows, especially producers who were culling but not going out of business, Gray said.

"In 2007 and 2008 when milk prices were $18 and $20, if they got any milk out of a cow, they just kept it," he said. "They were focused on volume and total production."

When milk prices crashed, however, those 20-pound and 30-pound-per-day milkers were no longer pulling their weight. So producers could cull two of those 30-pound cows and replace them with one 60-pound cow, and it didn't change production much.

Production per cow in the 23 major milk-producing states averaged 1,721 pounds for October, 21 pounds above October 2008, according to the National Agricultural Statistics Service. Total milk production in October was 14.3 billion pounds, down 1.1 percent from October 2008. September revised production, at 14.0 billion pounds, was down 0.5 percent from September 2008.

"We didn't see any change in milk production till September ... and just a little," he said. "We'll see more changes as we go along now. I think we'll see production continue to go down."

Gray also predicted cow numbers will continue to decline as CWT takes another 26,000 head to slaughter and bankers say no to new loans.

"Bankers aren't going to want to roll this year's loan into another one. They're going to want guys to pay up," he said.

That will mean more cows going to market.

"Banks are way into these guys. If they have a chance of getting out, they're going to do it."

Jerry Dryer, in his Dairy Market Analyst weekly update, agreed. "Depressed prices have forced herd liquidations in the West, and more herds will be dispersed by bankers as milk prices move higher during the first half of 2010," he wrote. "As soon as milk producers have somewhere between almost enough and enough equity to make their banker (nearly) whole, the loan will get called."

Dryer said he expects the dairy herd to shrink to 8.9 million in 2010, "the lowest it's been in eons." He also expects production per cow to wane as the year progresses.

"Production per cow this year has been driven by almost ideal weather almost all year almost everywhere in the USA," he said. "It will be a tough act to follow."

All told, the milk supply could be very, very tight during much of 2010, he said.

October stats

Milk cows (1,000 head)

State 2008 2009

California 1,845 1,767

Idaho 554 546

Oregon 115 114

Washington 245 240

Milk per cow (pounds)

State 2008 2009

California 1,835 1,815

Idaho 1,870 1,870

Oregon 1,615 1,625

Washington 1,920 1,940

Milk production (million pounds)

State 2008 2009 % change

California 3,386 3,207 -5.3

Idaho 1,036 1,021 -1.4

Oregon 186 185 -.05

Washington 470 466 -0.9

Source: USDA