Economic Outlook for Representative Dairies Given the August 2006 FAPRI/AFPC Baseline

While projected milk prices are a primary determinant of the financial viability of the representative dairies, the prices of feed crops and cattle prices can also have an impact. Most of the dairies produce hay, silage, and other crops and are often net buyers. Commodity prices have a major impact on dairy returns because feed represents the number one cost for dairies. With the recent increase in demand for corn, prices are projected to increase, potentially affecting rations and feed costs.