Texas dairy producers see high prices, high input costs

Texas dairy producers pushed into third place nationally at the beginning of 2022 and have experienced historically high prices and input costs, according to a Texas A&M AgriLife Extension Service expert.

Jennifer Spencer, Ph.D., AgriLife Extension dairy specialist, Stephenville, said prices are good for producers and demand continues to be high for milk and milk products from cheese to ice cream, while fluid milk consumption continues to decline.

Spencer predicted last year that Texas would move past Idaho and into the No. 3 milk production spot nationally as more processing facilities opened. Two cheese processing plants – Abilene and Amarillo – broke ground last summer and will increase the capacity for producers in the Texas Plains, where 80% of the state’s milk is produced.

But even without the added processing capacity, Texas milk producers increased the number of dairy cows by 20,000 head, which helped Texas surpass Idaho in milk production between January and April. Texas dairies produced 1.4 billion pounds of milk compared to 1.39 billion pounds produced in Idaho.

Texas slipped back to fourth as higher temperatures set in, according to the Texas Association of Dairymen.

Spencer said milk production in June 2022 increased 6.9% compared to June 2021. Texas milk production totaled 15.6 billion pounds in 2021, up 5% from 2020, according to the U.S. Department of Agriculture. Total cash receipts were around $2.83 billion for the Texas dairy industry.

“Idaho has been struggling with drought and heat as well, but we have extreme heat, humidity and limited water availability to contend with,” she said. “But where most states are shrinking or maintaining production, Texas is consistently increasing milk production, demonstrating how dairy is a thriving agricultural industry in the state.”

Prices high, but costs up as well

Historically good prices are welcome news to dairy producers as the industry recovers from pandemic restrictions that impacted consumption of products from carton milk for schools to butter and cheese used in restaurants.

Prices per hundredweight have ranged between $23 and $25 between January and April, and a USDA report priced milk at $25.13 per hundredweight for August and a peak of $25.87 in June and July.

Pre-pandemic prices were around $19 per hundredweight, but prices averaged around $15 per hundredweight in 2020. The price per hundredweight was around $17 in June 2021.

Milk prices typically rise during the summer months, as higher temperatures impact output, and demand for ice cream and other summertime favorites increases, Spencer said.

But despite the good prices, Spencer said dairy producers have also faced much higher input costs. Feed, fuel and fertilizer prices have driven the break-even price per hundredweight of milk higher as well.

“That break-even price is operation-specific – where they are, what they feed and the size of the dairy – but input costs have pushed that price too close for some,” she said.

Spencer said dairy industry trends continue to show the number of dairies is declining as the dairy size and overall production continues to rise.

Demand for milk and the range of dairy-based products from protein powder, cheese and ice cream continues to rise despite fluid milk demand being down 2.4% from this time in 2021.

Export demands continue to be strong as well.

Texas has been doing extremely well among the top 24 dairy producing states, and I expect that trend to continue,” she said. “We’ve been in a back-and-forth battle for third place, but with the production increases we’ve experienced and the processing facilities coming, dairy production in Texas is looking strong.”

AgriLife Extension district reporters compiled the following summaries:

ROLLING PLAINS

Conditions remained very hot and dry. Moisture from the rain last week quickly dried away. Sorghum was in fair condition and starting to head out. Corn was being salvaged as silage. Cotton conditions ranged from very poor to poor in the dryland fields, and irrigated fields looked good with low pest pressure. Some cotton fields were being abandoned and zeroed out. Some producers started to clean up fields for wheat. Pastures dried up, and fire was a major concern. Most Sudan grass and hay grazer was burned by heat and no moisture or not producing enough to bale. Some producers were afraid to graze fields due to worries about  prussic acid and nitrate poisoning. Tested fields were positive for both. Hay prices were high, but there was limited hay on hand. Cattle were being fed hay, cake and minerals. Producers were selling high volumes of livestock. Armyworm infestations were heavy in irrigated hay fields. Grasshopper infestations were heavy around the district. Native pastures were bare, and trees were browning and losing leaves.

COASTAL BEND

Drought conditions continued. Cotton defoliation and harvest was underway. One band of rain slowed cotton harvesting but did not impact yield performance on the crop. Early planted cotton appeared to be the most likely to yield from 800-1,300 pounds per acre while later plantings were expected to be in the 400-900 pounds, but some fields failed. Rice was nearly all headed out, and harvest was underway with lower-than-expected yields in conventional fields. Sorghum and corn harvests were nearly complete. As expected, yields were 30%-50% of normal. Early planted sorghum fared the best while later-planted sorghum struggled to reach maturity. Hay was scarce and many producers were buying from other locations if they could find it and afford the freight. Inflation, drought, extreme cost of custom harvesting, transportation, fertilizer and fuel costs were weighing heavy on producers. Livestock producers were still performing early weaning and heavy culling.

EAST

Drought conditions continued to worsen across the district. Little to no measurable rainfall was reported. Subsoil condition was very short. Topsoil condition was very short to short. Pasture and rangeland conditions were very poor. Ponds and creeks were going dry. Drought conditions combined with record high fuel and fertilizer prices caused many cattle producers to sell out. Others have continued to cull herds. Producers looked out-of-state hay options and were feeding cubes and other forms of grains.

SOUTH PLAINS

Conditions were hot and dry. All counties were in desperate need for rain. Producers were selling cattle because of high feed costs and no grazing.

PANHANDLE

Some parts of the district received much-needed rainfall. The western side of the district received from 2-6 inches of rain. Runoff put water into area playas and creeks. The moisture contributed to improvement in crop conditions. The rest of the district was still very hot and dry and in much need of moisture for crops and rangelands. Rangeland and pasture conditions were very poor to poor, and crop conditions were fair to good.

NORTH

Soil moisture was mostly very short across the district. There was no measurable rainfall. Some areas reported no rain for more than 80 days and consistent 100-degree temperatures. Corn harvest was underway. Many sorghum and soybean fields were cut and baled for hay or silage. Cattle were still being culled and sold. Calves were being weaned early to help preserve a little grass in pastures. No real insect or disease problems were reported in crops. Horn and stable flies continued to increase. A few pond fish die-off events were reported.

FAR WEST

The average high temperature was 108 degrees with an average nighttime low of 76 degrees. No rain was reported. Rangelands continued to deteriorate. Many producers reported damaged trees and dying plants. Cotton was beginning to go downhill quickly as the plant water demands exceeded irrigation abilities. Earlier-planted fields were holding on, but the later-planted fields were wilting earlier in the day, and the first bloom was much closer to the top of the plant. Cotton yields were expected to be well below average. Pima and upland cotton in the Rio Grande Valley were coming along nicely and setting bolls. Corn was finished, and most acres may not be harvested. Sorghum harvest was questionable as well. Producers continued to pick melons with several fields going on a fourth or fifth picking, which was very rare in this part of the state. Alfalfa looked good following recent rainfall, but weeds were becoming a problem. Pecans continued to make progress and pecan weevil applications should start later this month. Cattle continued to be shipped.

WEST CENTRAL

Very hot and dry conditions continued. Temperatures were over 100 degrees every day with no rain in sight. Sorghum and corn were mature, and harvest should start soon. Yields were expected to be low due to drought. Irrigated cotton was doing well considering the lack of moisture. Many producers were culling and selling livestock. Not much forage was available to graze on, and hay prices shot up to $150 per bale or more.

SOUTHWEST

Dry conditions made for extremely poor forage for livestock. Hay continued to be imported to supplement livestock. Corn and milo harvest was wrapping up with below-average yields reported. Hot and extreme heat was expected to continue through the week.

SOUTH

The northern, eastern and western areas of the district were very short on moisture while southern areas reported very short to adequate moisture levels. Temperatures were in the triple digits daily. The corn harvest continued, and grain sorghum harvest finished. Irrigated cotton looked fair. Bermuda grass, watermelons and cantaloupes with irrigation were in good condition. Some cotton was being harvested, and sesame harvest began. Rangeland and pasture conditions continued to decline, and supplemental feeding of livestock continued. Hay reserves were dwindling, and producers were hauling hay and continued to cull herds deeper. Prickly pear cacti were wilting, and mesquite trees were stressed. Wildlife were searching for water and food with many stock ponds drying up.