2010 Ohio Dairy Farm Business Preview and 2011 Analysis Opportunities

Mrs. Dianne Shoemaker, Dr. Bill Weiss, and Dr. Normand St-Pierre, Extension Dairy Specialists, The Ohio State University (top of page) pdf file

The record high Class III average milk price of $18.37/cwt in 2011 was the only thing that stood between Ohio’s dairy farms and a sea of red ink, much like we experienced in 2009.   Ironically, record high grain prices will have “eaten” much of the potential 2011 net farm income on many of Ohio’s dairy farms.   What will actual net farm income be?  Each dairy enterprise will be different, ranging from good to poor depending on a variety of factors.   
Ohio’s Dairy Farm Business Analysis Program can help dairy farms get a handle on their farm’s numbers.

A look at data from 24 well-managed Ohio dairy farms that completed a 2010 business analysis clearly illustrates the range in profitability in the dairy business.  While milk sold per cow and milk price received wasn’t substantially different, net return per cow averaged $555 per cow for the top 20% of the herds (5 herds, based on return to assets) compared to an average net return of (negative) -$187 per cow after labor and management for all 24 herds.

24 Ohio Dairy Farms Completing FINANs with enterprise analysis for 2010. 

*Feed costs for whole herd with raised forages uniformly priced at state average prices

The 2010 was still a challenging year for many dairy farms.  Even before the labor and management charge, less than half, or 10 of the 24 farms, generated a positive net return per cow.  The average net return for all farms before labor and management was less than $15/cow.

Only one third of the farms had feed costs less than $10/cwt.  The top 20% of herds, averaging $8.74/cwt in feed costs, were 11.5% lower than the average feed costs of all farms at $9.88/cwt.  Excluding the top 20% (5 farms), the remaining 80% (21 farms) feed costs averaged $11.13/cwt.  Feeds were priced at: corn $3.92/bu, corn silage $42/ton, alfalfa hay $144/ton, mixed hay $112/ton, and grass hay $84/ton (remember this was 2010!)

Farms that participate in the 2011 Ohio Dairy Farm Business Summary will have the opportunity to calculate their farm’s business numbers and then compare them to similar farms, averages, benchmark reports, and the top 20%, and learn how to use them to identify opportunities to improve their businesses.

Grant funding from the National Farm Benchmarking project allows OSU Extension to offer the 2011 FINAN financial analysis, including enterprise analysis, to 100+ farms at no cost to the farm.  Field crop, dairy, livestock, poultry, and horticultural crop farms are welcome to participate.  Analyses will be completed by either Extension or Farm Business Consultants who previously worked with the Farm Business Planning and Analysis program.  Farm data confidentiality is an important component of this program.

We invite and encourage you to participate in Ohio’s 2011 Farm Business Summary.  This is a prime opportunity with the benchmarking grant covering the $600 per farm cost of analysis.  Questions?  Contact Dianne Shoemaker (shoemaker.3@osu.edu) at (330) 533-5538 to discuss this opportunity.