What financial benchmarks are useful for measuring the performance of dairy farms with 100 cows or less?

To answer that question, Jim Polson, district farm management specialist with Ohio State University, and Dianne Shoemaker, district dairy specialist with Ohio State University, compiled 1998 financial information from 235 New York, Michigan and Wisconsin dairy farms with 80 to 120 cows.

Based on this data, Polson and Shoemaker identified four benchmarks which conventional 100-cow dairies can use to evaluate their profitability.

“The benchmarks apply for 1998 and should apply very well in 1999, which were both very good years for many producers,” Polson says. “However, milk prices in 2000 were much lower, so gross income would be lower and the operating expense ratio would be higher,” he adds. Here are the four benchmarks:

1. Generate gross farm income greater than or equal to $3,500 per cow.

2. Aim for an operating expense ratio less than or equal to 60 percent.

3. Achieve milk production per cow at or above the average in your state.

4. Reduce farm debt to less than 45 percent of farm assets and $3,000 per cow.

If you would like a copy of the complete paper, contact Polson by e-mail at: polson.1@osu.edu