Find your net margin per hundredweight
To get this figure, subtract your variable cost from milk income to get your gross margin. Once you have that figure, subtract your fixed cost. That will give you your net margin.
To find net margin per hundredweight, divide your net margin by hundredweights of milk produced.
This sounds complicated, but this number matters. It is a key part of the process to find the obstacles that impact your profits.
What makes a top dairy farm top?
The top farms, according to Mike Hosterman, AgChoice Farm Credit agriculture business consultant, have a healthy balance in the following five key areas:
• Industry skills (like the ability to manage internal growth).
• Cost of production and cost control.
High-performing farms do not necessarily have the best performance in all areas, he explains, but they strike a good balance and are competent in all areas, not letting any single element of the equation slip.
For additional information on factors affecting dairy profitability, check out the analysis from Kansas State University at: http://www.agmanager.info/livestock/