July 2012 milk COP a record high

Higher feed prices pushed U.S. average milk production costs to a record high in July 2012, according to USDA’s monthly Milk Cost of Production estimates. The July 2012 costs surpassed previous highs in July-August 2008 by $1.75/cwt.

The preliminary July 2012 average total cost was $27.43/cwt., up $2.05 from June 2012, and $3.61/cwt. more than July 2011. Cost estimates are based on total farm costs per hundredweight of milk sold.

July purchased ($9.27/cwt.) and homegrown ($6.42/cwt.) feed costs were up $1.32 and 32¢, respectively, from June, and up $2.63 and 58¢, respectively, from July 2011. The overall feed cost of $15.85/cwt. was up $1.65/cwt. from June and $3.22/cwt. from July 2011. Feed costs represented about 58% of total costs.

Fuel and energy costs were steady to lower compared to the previous month and year, helping prevent even higher operating costs. Total operating costs (including feed) were up $1.75¢/cwt. from June and $3.16/cwt. from July 2011.

Increases in labor, opportunity costs of unpaid labor, and capital recovery of machinery and equipment pushed unallocated overhead costs up 29¢/cwt. from June.

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Milk Cost of Production, total costs per $/cwt. milk sold

Costs July 2012 June 2012 July 2011
All feed 15.85 14.20 12.63
Operating* 19.02 17.27 15.86
Allocated overhead** 8.41 8.11 7.96
Total costs 27.43 25.38 23.82

* Includes feed

** Includes labor

Source: USDA Economic Research Service