Replacements weren't even a top three item in 2017.

It’s no surprise that just about everything that goes into making milk is expensive. While there is some ebb and flow each year in the cost of individual items, the bottom line grand total is always a big one.

According to 2017 income and expense summaries from Genske, Mulder & Co., the nation’s largest dairy accounting firm, the average cost of production for its clients last year was $16.86 per hundredweight. (That amount does not include current debt repayment and owner draw.)

By comparison, the average cost of production in 2016 was $16.89, and in 2015 it was $18.61.

Feed has always been the largest expense category for all dairies and it has varied significantly during the last decade. But can you guess what the 10 biggest individual expense items were in 2017?

Here is the firm’s top 10 list:

1. Grain$5.78/cwt.
2. Hay, silage and farming$4.99/cwt.
3. Labor$1.76/cwt.
4. Herd replacements$1.71/cwt.
5. Interest and rent $0.78/cwt.
6. Supplies$0.69/cwt.
7. Depreciation/other$0.69/cwt.
8. Repairs and maintenance$0.61/cwt.
9. Milk hauling$0.49/cwt.
10. Utilities$0.32/cwt.

Does the order surprise you?

Total combined feed expense being over $10 per hundredweight probably doesn't.

What about labor costing more than herd replacements? With the low supply of employees and the high popularity of sexed semen, the gap between those two items may only continue to widen.

To comment, email your remarks to intel@hoards.com.
(c) Hoard's Dairyman Intel 2018
July 9, 2018
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