2012 proved to be another year of challenged profitability for Minnesota dairy farms, with net returns per cow down 44% from 2011.
That’s based on financial data from 339 Minnesota dairy farms who participate in the Minnesota Farm Business Management Program database.
Net returns per cow averaged $293 in 2012, down from $524 in 2011. The very best farms in the data set, those in the top 10%, saw a net return of $989/cow, even though their milk production was just 400 lb./cow higher, says Del Lecy, a farm management instructor with Central Lakes College based in Staples, Minn.
The average milk price received by farms in 2012 was $19.64/cwt, down just 20¢/cwt from 2011. The biggest reason for lower returns is higher feed costs. Average feed costs jumped 16.5% to $10.29/cwt. (Note: Feed costs are based on market prices.)
Milk production in these herds continues to climb, with average production now at 22,395 lb./cow. Average herd size in the data set is 165 cows, which is about 50 cows higher than the state’s actual average.
The biggest differences within the dataset are among herd sizes. Herds with less than 50 cows average just over 16,000 lb. of milk per cow. Herds with more than 500 cows average nearly 26,000 lb. of milk per cow. And only herds with more than 100 cows saw a positive return in 2012 when all costs—direct, overhead, labor and management—were considered.