Huge profit decline on US dairy farms

16-06-2016 | |
<em>Photo: Pixabay</em>
Photo: Pixabay

US dairy farms in the Midwest saw their gross profit (EBITDA) in 2015 fall from just over 3.9 million dollars to approx. 1.56 million dollar. Net income fell from over 2.9 million dollars to over 551,000 dollars.

This is concluded from the profit and loss accounts of more than 50 large dairy farms, prepared by accountant’s bureau Nietzke & Fauple.  In 2015, the dairy farms had an average of 2,017 dairy cows, producing over 25 million kilograms of milk together. That is considerably more than in 2014. The average in 2014 was 1,822 cows, accounting for 23 million kilos of milk.

Milk prices down sharply

As seen in the EU, the milk prices in the US went down as well. The US prices saw a drop of more than quarter, reaching US$36.90 per 100 kg. The average milk sales fell from $11.7 million to $9.58 million per farm. The farm gate to the factory costs are not yet subtracted from this amount. Remarkably, these transportation fees have increased again, as seen in 2014 as well. In 2015, it increased to $401,000 per farm.

Yet positive result per dairy cow

In 2015, feed costs were down from $5 million to $4.79 million. The replacement costs were up, from $1.3 million to $1.45 million. But this was only due to the expansion in the number of dairy cows. Despite the critical milk price, the farmers still realised a positive result of $779.70 per dairy cow. This was the result of higher sales and growth and a decrease in total costs per kilogram of milk.

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Willem Veldman
Jan Willem Veldman Editor Boerderij (part of Misset)