| | The annual Economics of Milk Production: The Dairy Cost Study provides information on the costs and highlights opportunities for efficiencies in the dairy industry. Pauline Van Biert, research analyst with Alberta Agriculture and Forestry, explains the results from the latest study.
“With the consumption of milk products growing substantially in 2016 and continuing through 2017,” says Van Biert, “Dairy farmers were challenged to respond to increase milk production. They were also challenged to increase the butterfat component in milk to meet the renewed interest in higher fat products such as butter and cheese. They were able to meet these demands, all of which came with costs and through good farm management.”
The total cost of producing a hectolitre – or 100 litres – of milk decreased by five per cent in 2017 compared to 2016. “The total cost for one hectolitre was $75.23, or almost $7,000 per cow, a decrease of $3.65 per hectoliter or $330 per cow. This value includes all costs, including non-cash capital costs such as depreciation and family labour. To me this is a highlight as both production and butterfat have increased,” says Van Biert.
The study found the highest cost category is feed which includes grains, special dairy rations, supplements, vitamins, calf feed, hay and silage. “In 2017, total feed costs alone made up 35 per cent of the total cost of production at about $2,800 per cow, down 5 per cent from 2016,” explains Van Biert. “Management of feed intake is very important as it affects the health of cows, the volume of milk produced, and also the butterfat content as well as other components.”
Van Biert adds that dairy farmers are significantly affected by market fluctuations in the cropping sector. Total feed costs decreased in 2017 due to lower market prices than the previous year. “Purchase prices for barley grain dropped 9 per cent and hay by almost 20 per cent. Most silage was homegrown and based on market values, dropped considerably.”
The 2017 Dairy Cost Study also found:
- The average herd size in Alberta was 165 milking and dry cows. It grew to 260 when including replacement heifers and calves.
- The average labour rate was $22.00 per hour with an estimate of 3 full time person equivalents to run the dairy enterprise.
- Investment in farm improvements continued. It was more about facilities in 2016. In 2017, it was more about purchasing cows.
- Increases in quota holdings enabled and encouraged higher milk production.
- The price farmers were paid for their milk remained quite stable.
Return to Equity - gross income less total cost - was about $1,060 per cow or 8 per cent, an increase from 2016 when it was $600 per cow or around the 5 per cent.
Read The Economics of Milk Production, 2017: The Dairy Cost Study. For more information or a printed copy of the study, contact Pauline Van Biert at 780-415-2153.
Contact:
Pauline Van Biert
780-415-2153 |
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