Falling milk prices virtually wiped out profits for Northeast dairy farmers in 2015, delivering close to break-even results on average, according to Farm Credit's Northeast Dairy Farm Summary.
In addition to reporting revenues and expenses by year, by herd size, and by profit groups, the study looked at regional differences as well. Even though little geographic area separates New York from its New England state neighbors, located just a bit further east, the net cost of production varied by $1.12.
Last year, New York farms averaged $18.15 "net cost of production" compared to $19.27 per hundredweight (cwt.) for the New England states.
On average, in 2015, it cost $18.36 (combining the New York and the New England states) to make a 100 pounds of milk last year in the entire region compared to $20.84 in 2014.
While costs declined $2.48 per cwt. from 2014 to 2015, it was not enough to counteract falling milk prices. Milk check income dropped by $7.34 . . . from $25.58 to $18.24. Overall, feed costs fell 8.6 percent and fuel costs dropped 35.7 percent when comparing 2014 to 2015.
"Profitability declined by 99 percent in 2015 from the prior year," wrote Northeast Dairy Farm Summary editor Chris Laughton. "Net household earnings fell to an average of $14 per cow, down from $1,169 per cow in 2014. When nonfarm income is subtracted, farms lost an average of $30 per cow," Laughton went on to write.
This situation led to reduced net worth and growing debt. Percent net worth fell from 75 to 72 percent. Average debt per cow climbed from $3,354 to $3,381.
The Northeast Dairy Farm Summary includes data from 487 herds. It is widely recognized as the most comprehensive study on East Coast dairy farms.
The 2015 Northeast Dairy Farm Summary can be found by following the link.
(c) Hoard's Dairyman Intel 2016
June 6, 2016