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Why Dairy Producers are Feeling Financial Pain

Dairy operators haven’t always been so challenged by $13 milk. In the past, a dairy’s price pain would be eased by $3.75 corn and sub-$400 soymeal. Not today, says Sarina Sharp, a market analyst for the “Daily Dairy Report” and a Farm Credit-sponsored presenter at the recent Central Plains Dairy Expo.

Too many other factors are squeezing margins and reducing operators’ equity cushion, said Sharp, who manages risk for feed, milk and beef for her family’s Michigan dairy operation. Costs such as environmental compliance, hauling, healthcare and labor are rising as incomes are taking a hit from lower calf prices, a weaker cull cows market, no MILC payments and more.

Costs are expected to continue to increase, Sharp said. But there could be good news on the income side, with the worst of the price slump likely behind dairy operators.

Sharp discusses the economic factors and their impact on dairy operations in this video.

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