Is milk price the most important factor in your dairy’s profitability? The answer may surprise you.
Researchers at Kansas State University recently completed a study of the factors that impact dairy profitability. Not surprisingly, they found a wide range of profitability among farms. But milk price was not the most significant determinant for profitability. It was total milk produced per cow.
The researchers say that the correlation between profitability and milk price over time is not particularly strong because of the influence that cost has on profit. “When analyzing why some producers are more profitable than others, milk production is a much stronger indicator or profit differences than is price or cost,” say study authors, especially when it comes to small or mid-sized dairy farms
Therefore, while big-picture factors, like milk prices, are important, producers’ individual management skills are more important for long-term business survival.
Source: Kansas State University