Dairy accounting

Agriculture banking expert Sam Miller with BMO Harris says that making a dairy operation more profitable means looking at your farm’s largest expenses and figuring out if there are ways to make small improvements. Every little bit counts.

“A quarter and a half percent improvement, from an expense control standpoint, in several different measures can add up to be meaningful numbers and improve the bottom line.”

 

Labor continues to be a high cost area for all sectors of agriculture. Dairy farmers are looking to technology and robotic milking systems to lighten the load — but like all things, that comes with added investment.

“The difference between a robotics system and a more conventional rotary or parallel herringbone parlor type of system is the payback period—how long you amortize that loan over. We’re really seeing probably 7-10 years for a robotics system.”

 

Factors beyond the farm gate can play a major role, too. Around 17 percent of milk produced in the U.S. today is exported.

“That’s more than one day’s worth of milk, and because of that, we need those world markets, and we need to have them consistent. So, when there’s a stronger dollar, it makes our dairy exports less desirable for a country to buy. And when the dollar weakens, that helps from an export perspective and helps dairy farm prices directly.”

 

No matter what the future brings, Miller says he remains optimistic for the next generation of dairy producers — those committed to caring for the animals and the land.