1. Home
2. Conferences
3. 2010 National Farm Management Conference

ECONOMIC COMPARISON OF U.S. DAIRY SYSTEMS

Thomas Kriegl

Summary

There is a perception that Wisconsin dairy systems are high cost producers and that they (especially the small ones) lack economies of scale especially relative to western dairy farms.

Multiple years of farm data from several other parts of the U.S. has been compared with dairy data from the University of Wisconsin Center for Dairy Profitability. Only one measure of financial performance is shown here, net farm income from operations per dollar of revenue (NFIFO/ $ revenue). The higher the NFIFO/ $ revenue, the lower the cost of production/ $ revenue.

Insights include:
1. Most of the actual farm financial data from dairy production indicates that the economies of scale (lowest cost of production per unit) occur at a much smaller size than people expect (possibly less than 100 cows per farm).
2. There are large consistent differences in NFIFO/$ revenue between many states and systems.
3. Graziers typically attain more NFIFO/$ revenue than other dairy systems in their states.
4. Small dairy systems typically attain more NFIFO/$ revenue than large dairy systems in the same state.
5. The larger farms tend to generate more dollars of total NFIFO per farm and per owner compared to the smaller farms.
6. No single system is most competitive in all circumstances.

The up-to-date conclusions of this project can be accessed at http://cdp.wisc.edu.

Details

---