Holstein cows

We've been saying since before 2015 ended that it was a bad financial year for California dairies, and now the state agrees.

Except it wasn't just bad, it was awful.

According to the just-released California Cost of Milk Production 2015 Annual from the California Department of Food and Agriculture (CDFA), the average dairy in the Golden State lost $769,887. That breaks down to $2,109 loss per day or about $1.74 per cow per day. The average herd size is 1,215 cows producing 23,382 pounds of milk per cow per year.

But those figures do not include a return on investment (ROI) and management allowance, which CDFA figures at 4 percent of average blend price received. When that is added in, the average total loss per dairy rises to $1,201,706.

Cost of production annuals are generated from monthly survey information volunteered by about 9 percent of all dairies in the state. The 2015 annual, as well as previous editions going back to 2005, are available on the CDFA website.

Sharply lower milk prices are the main reason for the 2015 loss. California's weighted average mailbox price for the year plunged to just $15.06 per hundredweight, a 31.1 percent decline from the record average of $21.85 in 2014 that generated an average profit of $1,260,558 per farm.

Average cost of production in 2015 increased 2.1 percent to $17.77 per hundredweight without ROI and management allowance and $19.29 with it. Feed cost ($10.46 per hundredweight) was the biggest single component by far.

The magnitude of the 2015 loss becomes clearer when compared to the epic disaster of 2009. According to cost of production data, the average California dairy lost $982,813 in 2009 not including ROI and management.

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(c) Hoard's Dairyman Intel 2016
May 23, 2016
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