In recent years, milk prices have fluctuated greatly. At Alltech’s recent Symposium, IFCN’s Mikhail Ramanovich discussed why some dairy producers have succeeded during this time, while others have not. According to Ramanovich, profitability comes from good management.
Ramanovich said the increase in milk prices from 2006 (from $16/100 kg milk to more than $40/100 kg milk) has created growth opportunities for milk producers. However, not all milk producers have been able to utilize these growth opportunities. Data compiled by the IFCN shows that milk production growth differs by location. Between 2006 and 2010, milk production in Asia, the United States, and Brazil rose greatly. Milk production has even shifted geographically within the United States.
The difference in milk production growth throughout the world is primarily due differences in production systems. Dairy farms throughout the world use different types of farming systems, and the size and yield of different operations also vary. Cost of production ranges from $15/kg milk to $100/kg milk. According to
Ramanovich, increasing production costs in India, China, and Poland are creating growth opportunities for the United States and the European Union. He explained producers who make money are those who keep production costs down.
In the past, the type of farming system a dairy operation used was mainly based upon the relationship between milk and feed prices. More recently, other factors, such as sustainability, have also become important. According to Ramanovich, developing systems that consider these issues and are optimized for particular regions is the key for growth.
To view the Alpha Chimp live scribe for Ramanovich's talk at the Symposium, check out this link.