By Robert Pore
robert.pore@theindependent.com

According to a report from the U.S. Department of Agriculture released last week, the number of state dairy operations fell from 700 in 2006 to 660 in 2007. Nationwide, milk cow operations were 5 percent below last year and 9 percent below two years ago.

The number of dairy cows in Nebraska also declined from 60,000 head last year to 57,000 head this year.

Recently, milk prices paid to farmers fell by more than a dollar per hundredweight as a result of slumping demand and increased milk production, according to the latest analysis of government data by the American Farm Bureau Federation.

"The drop in milk prices paid to farmers is a sign of a slight downward market correction that's been expected since the end of last year," said Allison Specht, AFBF's dairy economist. "We are now operating in a highly volatile marketplace where nothing is certain especially production costs."

A big part of a dairy operation's production costs is feed. The USDA reported that last month in Nebraska, the average corn price was $4.25 per bushel, which was up from the average January 2007 price of $3.04. Soybeans jumped from a $6.21 per bushel state average in January 2007 to a January 2008 average of $11.20 per bushel.

But while feed costs skyrocket, the USDA's announced Advanced Class I price paid to farmers (the price for fluid milk) for February 2008 is $19.68 per hundredweight, down $1.28 from January's price of $20.97 per hundredweight.

Specht said milk production was up to 14.4 billion pounds in 23 key states in December 2007. There were 8.38 million milk cows in December 2007, a 14,000-head increase over November 2007 and a 107,000-head increase over December 2006.

In an effort to help rebuild Nebraska's dairy industry and take advantage of the state's booming ethanol industry, new research suggests that it is possible to feed dairy cows up to 30 percent distillers grains on a dry matter basis when the feed ration is properly balanced.

According to the publication: "Feed co-products from the dry milling industry are quickly becoming common and cost effective ingredients in dairy diets. Assuming the price of distillers grains will continue to remain lower than corn grain and soybean meal, it is easy to predict that rations including these feeds will be cheaper. This economic benefit underscores the growing importance of understanding how co-products may be included in dairy diets."

Kelly Brunkhorst, ag program manager for the Nebraska Corn Board, said with the ethanol industry continuing to expand, the production of distillers grains will also grow, providing a cost-effective feed ingredient option for dairy producers and their nutritionists.

"Dairy producers from Nebraska to California or any state can benefit by including distillers grains in feed rations," he said.