Volume 15, Issue 7
The Northeast Dairy Farm Summary
We recently released the 41st edition of Farm Credit’s Northeast Dairy Farm Summary, with analysis of actual farm financial data from 204 Northeast dairy farms. Farm Credit East also recently hosted a webinar reviewing the results as well as providing a mid-year market update from Agri-Mark economist Catherine de Ronde and a risk management discussion with Crop Growers’ manager Jeremy Forrett. You can access the recording here.
Here are a few highlights from the 2020 Northeast Dairy Farm Summary:
- Net earnings of the farms in our sample increased to an average of $663 per cow in 2020, from $447 per cow in 2019.
- Government payments, including COVID-19 relief programs, made a significant contribution to earnings, averaging $565 per cow.
- Excluding government payments, average farm revenue per cow declined by $94, or 2%, to $5,413.
- Total costs increased by 3% from 2019 to 2020. Total expenses per cwt. increased by $0.59 per cwt. to $20.79 in 2020.
- Farms’ net cost of producing milk (NCOP) increased to $18.11 per cwt., $0.30 higher than 2019.
- Some specific cost categories that changed in 2020 include:
- Feed expense, a farm’s largest cost, increased from $1,625 per cow in 2019 to $1,718 in 2020.
- Labor, a dairy farm’s second largest expense, increased overall by 3.0% per cow, and 2.6% per cwt. However, when family labor is taken out, hired labor costs rose by 6.6% per cow.
- Fuel expenses decreased by 23% per cow as a result of lower oil prices.
- Productivity increased slightly. Per cow production in our sample herds was 0.4% greater than the prior year.
- Milk sold per worker increased 4.1% due to more cows per worker, as well as greater per-cow production.
- Cash flow was sufficient, on average, to meet financial commitments (e.g., operating expenses, debt repayment, family living and income taxes), resulting in an average cash margin per cwt. of $0.35. This was a smaller cash margin than 2019’s $1.43/cwt.
- Percent net worth in our sample increased to 69%.
- Total debt-per-cow decreased from $4,061 to $3,981, largely as a result of an increase in average herd size.
2020 was certainly a remarkable year for Northeast dairy producers. Even though significant variations in earnings from year-to-year and market volatility have become the norm in the dairy sector, one would be hard pressed to imagine a more unusual year than last year.
The COVID-19 pandemic significantly changed our daily lives, and with that, turned food supply chains, markets and the overall economy upside-down in a matter of just a few weeks in early 2020. Impacts of this dramatic change were felt across the food system. Producers, processors and distributors struggled to deal with the changes required both in terms of the food supply chain as well as the operational changes required to keep workers safe from COVID-19.
Milk prices reflected this market turmoil and fluctuated from $18.78/cwt in January, to $13.47 in May, and back to $19.08 in July (Boston Blend). Despite this, Northeast dairy farmers managed to maintain a high level of efficiency and cost control on their farms, resulting in positive net earnings for the average farm in our sample aided in part by government support programs
To access the report, click here. Printed copies are available by request. If you are a Northeast dairy producer who would like to participate in next year’s Dairy Farm Summary please contact us at firstname.lastname@example.org.
Editor: Chris Laughton
Contributors: Chris Laughton and Tom Cosgrove
View previous editions of the KEP