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Increased Corn Prices Trouble State Dairies
By Douglas Wilcox
MISSISSIPPI STATE -- Caught between a rock and a hard place might best describe how Mississippi dairy producers are feeling this year. With the skyrocketing price of corn and low beef prices being offered for cull dairy cows, dairymen are facing a choice between paying higher feed prices or retiring and selling off their herds.
Dr. Tom Jones, extension agricultural economist at Mississippi State University, said last year's small corn crop is cutting into some dairy producers' profits and possibly forcing others out of business.
"The price of corn is being regulated by demand. Producers leaving the industry obviously aren't buying corn," Jones said. "A majority of those staying who have available acreage are trying to grow their own silage."
Producers over the past two years have watched the price of corn dip to about $2 a bushel and rise to about $5 a bushel. The current price of corn is $3.41 to $3.70 a bushel.
"The price of corn affects many grain-fed animals, including cows, chickens and hogs. Every producer who didn't want to pay the higher feed prices cut back this year," Jones said.
In the early 1980s, dairymen in the Southeastern states produced 16.6 percent of the nation's milk supply. Last year they produced 9.5 percent.
"The number of dairies in the state has decreased from 509 at the beginning of the year to 486 as of July 1," said Dr. Bill Herndon, MSU extension agricultural economist. "The price of corn has been a contributing factor -- farmers have a tough time paying their feed bills. And if the export market for corn remains healthy, corn prices should stay in the $3 to $4 range for the next year."
Herndon said dairy production is very sensitive to supply and demand.
"High feed prices have caused producers to reduce the size of their herds or leave the business, which has reduced milk supplies. Those dairymen staying in business are experiencing an increase in the price for their milk," he said.
Dairy processors are having to pay about $3 more per hundredweight of milk -- which means consumers can expect an increase of 8 to 10 cents per gallon at the checkout counter this fall.
The majority of Mississippi's dairies are located in Walthall, Pike and Lincoln counties. The average size of a dairy herd usually ranges between 100 and 200 cows.
Herndon said the size of herds averaged 60 to 80 cows a decade ago, but smaller dairy farms are becoming less common.
"Profit margins per cow are getting a lot smaller. I wouldn't recommend going into the dairy business today with less than 150 cows," Herndon said.