The biggest takeaways for Minnesota dairy operations from the 2019 Farm Business Management report are that for Farm Business Management enrollees, last year's average cost of dairy production was $1.16 per hundredweight less than the price of milk, and farms with 50 cows or less saw a significant loss, unlike farms with 50 cows or more.
These points were shared during a dairy finances webinar held by the Minnesota Milk Producers Association. The webinar was hosted by Keith Olander, director of AgCentric and Central Lakes College Ag & Energy Center, and summarized the findings of last year's Minnesota Farm Business Management report in order to break down data for dairy farmers to make informed management decisions from.
"Really we're kind of looking at what can we learn from these numbers to propel us forward into the future," said Olander at the start of the webinar. "Because we know we're in some unique time here and certainly the last 60 days."
Olander said while the dairy industry has faced major challenges as of late, "there are silver linings in the clouds" to be optimistic about.
Major findings from last year's report were that the average cost of production was $17.65 per hundredweight of milk among FBM enrollees, with an $18.81 per hundredweight milk price. Farms with 50 cows or less saw a loss on average of $14,999, while farms with over 50 cows were profitable after labor and management costs for the year. Across five types of all 299 state FBM herds, the non-robotic 3x milking sort returned the most, and organic returned the least in net returns.
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For anyone in the dairy industry, it's not a surprise that the herd size on dairy farms has increased significantly over the last decade, Olander said.
According to the report, 235 was the average herd size at dairy farms in the state.
"As the profitability per cow becomes less and less, the farm family looks at how do we do more," Olander said.
Average milk production per cow has also been on the rise in the last decade, he said.
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"We've got a great story to tell about cow comfort here," Olander said. "You do not get this kind of production out of cows that are not well taken care of."
In regards to the 2018 and 2019 slip in milk production per cow average, Olander said it's likely due to the fact that feed is "undoubtedly one of the key drivers in dollars and expenditures in a dairy operation."
"It's always tempting to go down that road and say, 'boy we should really trim (feed) back by a few percent,'" said Olander. "Unfortunately when you start driving back that feed bill, it does show up in production."
For the first time, Farm Business Management chose to include an environmental cohort in its annual report. The 53 dairy farms included in the Minnesota Ag Water Quality Certification Program showed "very strong financial results."
“Farmers are in a position that requires micromanagement of their finances to reduce the impact of an unpredictable market,” said Olander. “As agriculture ambassadors, it’s important to communicate dairy farmers’ financial condition to consumers to encourage a shared vision of dairy’s future.”
The webinar was recorded and is available to view on the MMPA website, mnmilk.org, under the Workshops and Webinars tab.
