Larger Dairy Farms More Likely to Generate Profits

WASHINGTON, DC – Large dairy operations have significant financial advantages over small and midsized farms, primarily because of lower average production costs per pound of milk produced. Therefore, larger farms can earn profits during times when smaller farms bear losses.

In 2016, according to the Economic Research Service (ERS), the average total costs of milk production fell from $33 per hundredweight among farms with 10-49 cows to less than $21 among mid-sized farms with 200-499 cows.

The costs associated with a mid-sized dairy were 21 percent higher than the average costs realized at the largest farms — those with at least 2,500 head. Larger herds realized lower gross returns because many are in regions with lower milk prices.

In 2016, farms with more than 1,000 head realized positive net returns on average, whereas farms with fewer head realized negative net returns on average.
(SOURCE: Economic Research Service)