If drought keeps driving feed costs up and cow prices down, dairy farmers may see earnings reduced by as much as 70 percent by 1989, according to a study by the National Milk Producers Federation.
Jim Barr, chief executive officer of the federation, said the rising costs of grain - concentrates - are at the heart of the grim outlook."At current milk and feed prices, a 15 percent increase in feed costs equates to an effective reduction to the farmer of 50 cents for each 100 pounds of milk marketed," he said.
A spokeswoman said federation analysts computed that there is a potential for a drop in the net cash income of dairy producers of between 50 percent and 70 percent.
For example, if prices of dairy concentrates rise 30 percent, forage costs go up 10 percent and the market prices of culled cows sent to slaughter decline by 15 percent, net cash income could be around $1.33 per each 100 pounds of milk sold.
Dondero said the figures were projected for a 12-month period, July through June 1989.