Dairy Farm Management: Business Summary, New York State, 2000

Abstract

Business and financial records for 2000 from 294 New York dairy farm businesses are summarized and analyzed. This analysis demonstrates the use of cash accounting with accrual adjustments to measure farm profitability, cash flow, financial performance, and costs of producing milk. Traditional methods of analyzing dairy farm businesses are combined with evaluation techniques that show the relationship between good management performance and financial success. The farms in the project averaged 246 cows per farm and 21,516 pounds of milk sold per cow, which represent above average size and management level for New York dairy farms. Net farm income excluding appreciation, which is the return to the operator's labor, management, capital, and other unpaid family labor, averaged $46,610 per farm. The rate of return including appreciation to all capital invested in the farm business averaged 4.8 percent. Differences in profitability between farms continue to widen. The top 10 percent of farms average net farm income excluding appreciation was $295,646, while the lowest 10 percent was a negative $153,963. Rates of return on equity with appreciation ranged from 23 percent to negative 39 percent from the highest 10 percent to the lowest 10 percent of farms. Farms adopting bovine somatotropin (bST) experienced greater increases in milk production, had larger herds and in the majority of recent years were more profitable than farms not adopting bST. Farms adopting rotational grazing generally produced less milk per cow than non-grazing farms but had somewhat lower costs of production and higher profitability. However, one should not conclude that adoption of these technologies alone were responsible for differences in performance. Large freestall farms averaged the highest milk output per cow and per worker, the lowest total cost of production and investment per cow, and the greatest returns to labor, management and capital. Farms milking three times a day (3X) were larger, produced more milk per cow and were more profitable than herds milking two times per day (2X). Operating cost per cwt. of milk was $0.69/cwt. higher for 3X than 2X milking herds, while output per cow was 4,067 pounds higher.