Making dairy profitable

Dairy farmers wanting to better understand, and boost, their profitability in the new year should take time to fully evaluate what’s happening on their operation and in the broader industry.

Challenging markets. Margin pressure. Labor challenges. All concerns the dairy industry understands well.

As producers look ahead to 2022, agriculture banking expert Sam Miller with BMO Harris warns the Holstein Association USA all of these factors will be at play.

“Costs have been rising at a faster rate than incomes, and that’s creating some margin pressure, so there are some challenges that are out there for the dairy sector.”

 

To mitigate risk, he suggests sharpening your pencil. Take a look at financial records and income statements to determine where revenue can be increased — and expenses trimmed. Miller says targeting a profitability range of $600 to $1,000 in income per cow is an excellent goal…tape

Cut #2                   :18          OC:…”from calf sales.”

“On the revenue side, it may be can you enhance premiums, from a milk quality perspective? Maybe it’s looking at converting to a dairy beef situation and breeding the bottom end of the cows to a beef cross and maximizing or improving revenue from calf sales.”

 

Miller suggests starting with the farm’s largest expenses and figuring out if there are ways to make small improvements. Every little bit counts