The outlook for Arizona dairies is mixed with higher milk prices and feed costs predicted, according to Tom Van Hofwegen ofFarm Credit Services Southwest in Tempe, Ariz. Alfalfa and corn are main components of dairy rations.

“The outlook for profitability for Arizona dairies is better than the two previous years,” Van Hofwegen said. “Arizona is still a desirable place to dairy compared with neighboring states as evidenced by two producers who expanded or relocated in Arizona versus New Mexico and Texas.”

Arizona wet and dry milk cow numbers increased from 167,000 head in 2009 to 184,000 head in December 2010. Milk production per cow was down slightly at 23,028 pounds in 2009 compared to 23,282 pounds in 2008. Dairymen are still struggling to overcome 2009 financial losses.

Van Hofwegen reported four dairy farm sales in Arizona last year; two lender-owned sales and two conventional buyer-seller transactions. Each sale price was soft. Each was partial Saudi-style operations built in the last 10 years.

Van Hofwegen says the United Dairymen of Arizona blended milk price is headed higher; from $11.56 per hundredweight in 2009, a $15.49 per hundredweight average in 2010, and as of February was projected at $18.50 per hundredweight in 2011. That is a 75 percent increase from two years ago.

The cost of production per head was $3,442 in 2009.

Imperial County

Imperial County, Calif., is located across the Colorado River from Yuma County. Yuma and Imperial counties comprise the largest winter produce-growing area in the United States. Both counties grow a variety of farm crops.

Myron Fortin of Southwest Farm Credit Services in El Centro, Calif., reported stable land and rental prices in 2010. Recent farmland sales included pricing from $4,000 to $7,000 per acre. Sales were slow last year with nine sales, compared to 22 sales in 2009, and 24 sales in 2008.

2010 Imperial County farmland values and rental rates include: good adaptability land (produce) - $6,000 to $7,900 (slow sales) with rent steady from $250 to $350 peracre; average adaptability (alfalfa) - $3,900 to $5,999 per acre (slow) with steady rent from $165 to $225 per acre; and limited adaptability - $3,300 to $3,899 (very slow) with $100 to $135 per acre rent (slow).

While cash rents have been stable overall, Fortin expects rent prices to jump due to higher commodity prices.