$17.65 — that was the average cost of production for 283 dairy farms enrolled in the Minnesota Farm Business Management (FBM) project in 2019.

To be fair, those costs varied greatly. The high-cost farms (representing 20% of the 283 farms) had a $21.08 cost per hundredweight (cwt). Meanwhile, the low-cost farms (representing 20% of the farms) had a $16.24 per cwt. cost of production.

Much of the cost variation could be attributed to feed costs.

  • All 283 dairy farms averaged a $10.40 milk-price-to-feed margin.
  • The high-cost dairy farms averaged a $8.79 milk-price-to-feed margin.
  • The low-cost dairy farms averaged a $11.02 milk-price-to-feed margin.

As for overall profitability . . . with an average milk price of $18.64 per cwt., it’s clear cut to determine who made a profit last year. Those with costs of $21.08 lost $3.43 per cwt.

Across all five types of dairy in the data set, the nonrobotic 3x milking group had the greatest income after expenses, while the organic herds had the least net returns.

Less than 50 cows lost money
Overall, those milking under 50 cows struggled. On average, these 25 dairy farms had 39 cows and lost $385.57 per cow. All other categories — 50 to 100, 100 to 200, 200 to 500, and over 500 cows — had a positive net return over labor and management, ranging from $14.94 per cow in the 50 to 100 category and steadily climbing to $420.82 per cow in the over 500 cows group.

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(c) Hoard's Dairyman Intel 2020
July 9, 2020
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