No decline in 2012 dairy cow numbers, despite Missouri’s drought, low profits

COLUMBIA, Mo. – Facing drought-reduced feed and low profits, Missouri dairy producers maintained their milk cow numbers in 2012, according to a USDA cattle inventory.

“The annual report contains surprises,” said Joe Horner, University of Missouri Extension dairy economist. “I’d heard reports all fall of dairy herds going out of business, but we didn’t drop cow numbers one bit. We held steady at 93,000 cows, exactly where we were a year ago.”

Horner says milk production numbers confirm the steady cow numbers in Missouri.

However, the state’s beef cow numbers dropped 5 percent.

Several factors helped dairy farms maintain the milking herds.

“We did lose 13 percent of dairy farms,” Horner said. “But we have a new generation of producers coming on. They grow as fast as the older demographics drop out.

“Last year, I did a lot of new business projections for young dairy farmers,” he said. “Actually, 2012 was one of best times to get into the dairy business.”

The newcomers could buy older dairy farms. At the same time, there wasn’t much competition for replacement dairy heifers.

“It was an extraordinary situation,” Horner said. “Dairy heifers were selling for about half of what replacement beef heifers cost. And dairy heifers cost little more than what cull dairy cows sold for.”

Lower startup costs reduced risks for beginners.

Dairy farms do face low milk prices and low profit margins. However, both meat and milk will be in short supply in years to come.

“Prices will get better,” Horner said. “We will need the inventory. Most dairy farms are run by full-time operators that need a certain volume of milk. Their livelihood depends on making milk. When feed supplies grew short in the drought, they went looking for feed and paid what was needed. They just did it.”

Some dairy farms chose to shut down rather than buy feed.

On the beef side, many cow herds are sideline operations. “When their feed ran out, owners culled their herd size to fit their feed supply,” Horner said.

Beef cow numbers across the country dropped 3 percent, while Missouri dropped 5 percent. “That shows we were the center of the drought’s bull’s-eye,” he said.

In the milk price stress, some dairy producers, who weren’t expanding their milking herds, sold their dairy heifers to beef feedlots.

Beef feed yards were scrambling for feeder calves, making dairy bull calves gain value, Horner said.

Horner sees optimism for dairy in Missouri. “As tough as it was in 2012, we did not see a drop in milk cow numbers. We have some tough survivors out there.

“Despite lots of concern, the dairy business is not falling apart.”