Re: How do big dairies make money?

Posted by JD Seller on February 26, 2017 at 06:40:13 from (208.126.196.24):

In Reply to: How do big dairies make money? posted by steve terplak on February 26, 2017 at 05:32:24:

Location makes a difference in several ways ways. 1) Is the cost of land to produce the required feed for the dairy. 2) Is the price they receive for their milk. Some areas pay more than others. 3) The regulations that the dairy has to comply with. Another poster stated that they have a minimum wage law that is one regulation. Another would be manure application and the area required. Different states have different rules.

Some general things I have noticed about larger dairies.
1) They usually are well managed. Many smaller dairies get by just because they work hard and spend very little. They many times are not very efficient at what they do. Most larger dairies are efficient at just about all the things they do. An example: Local larger dairy milks 1200 head three times each day. It takes them 7 hours per milking and one hour to clean up. Five workers per shift for milking. Actually four milking and one moving the cows in and out. They earn $15 per hour. So that is $1800 per day or $1.50 per cow per day.

2) There are economies of scale in the business. Both on the sales side and the input cost side. They buy feed in multiple semi load lots. So usually their feed costs are lower. On the other side I have a cousin that milks in the Eastern part of the US and he receives a $1 a hundred weight more than a small dairy just because he ships semi load lots. He has a rolling herd average of right at 100 Lbs. so that is an extra dollar a day income. On the 1000 head they milk that means $1000 a day extra income or $300,000 per year.

3) The larger dairies require more acres of feed so the cost per acre or per ton on equipment cost is usually lower than many smaller operations.

4) Usually they keep better records than many smaller dairies. So they can manage things better with that information.

Now keep in mind that these are just "general" observations. Not all larger dairies are efficient and many smaller dairies are low cost/profitable ones too. It is that individuals having good management skills and good herdsman skills both is rare. So smaller dairies many times are weak in one area or another. The larger producing dairies can fit different skill levels in easier. The standard in most dairies is multi generations of one family working together utilizing their individual skills. This can be small or large but is trending large just because of income levels required.

I also feel that the robot milking units are just a short term trend. Either they will have to get cheaper or they will fall out of favor like the computer feeders did 15 years ago. The reason is cost per cow milked. They are not competitive with the larger dairies that use hired labor to milk with.

Now keep in mind it is the US only that I can speak about with much knowledge. Canada has a quota system that makes it totally different too. Production in Europe is totally different as well and I can not comment with any degree of accuracy about them either.

Replies:

• Re: How do big dairies make money? NY 986 10:56:51 02/26/17 (0)
• Re: How do big dairies make money? coonie minnie 08:26:36 02/26/17 (0)

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