An inside look at 2,500+ cow dairies: 70 pounds, $1.4M profit

In the times of both high feed and high milk costs, large dairy farms with land in the Upper Midwest look to be very profitable endeavors. While every location and farm is different, large farms can generally see a benefit in asset and labor utilization, specialized care, and lower wages as employees can take over jobs typically offered to higher-paid specialists and consultants, like veterinarians.

As these larger farms become normal in the Upper Midwest, the University of Minnesota examined the animal welfare, management, and economics of a cross-section of 15 dairies with over 2,500 cows in Iowa, Minnesota, South Dakota, and Wisconsin, averaging 4,972 cows. Dr. Marcia Endres and graduate student Tyler Evink completed the study, which totaled a full third of such operations in the region at the time.

Two types of big dairy facilities

In facility categories, the dairies used one of two options. Of the 15, they were almost split down the middle in terms of sand-bedded (7) or deep-bedded recycled manure solids (7), with the other a mattress freestall topped with recycled manure solids. Of the seven sand-bedded herds, three used mechanical separation and four used sand settling lanes.

Eight farms utilized an anaerobic digester, and the same number of farms housed their cows in cross- or tunnel-ventilated freestall barns with the balance naturally ventilated.

What might be a surprise to many is the modest production of these farms, with an average 70.3 pounds per cow produced. Of the 15 herds, 12 were Holstein, 2 milked Jerseys, and one was predominantly HoJos. The range of production was 61.1 to 80.8 pounds per day, with a component average of 3.85% fat and 3.15% protein. SCC averaged 190,000, with a range of 133,000 to 245,000, and pregnancy rate at 21-days was 21.7%.

Margins of $1.10 per cwt, with feed costs under $10

The researchers found low lameness on the farms, with just 16.7% of cows lame overall, 5.1% being severe, being on par or better than many farms smaller in size.

Cost of production for the farms was $17.88 per hundredweight with a $19.02 milk price. Feed costs took 53% of costs at $9.47, with $1.90 in labor, $1.76 in interest and depreciation, and $1.70 in replacement cost (all per cwt.). An additional 17% of the cost of production was in other categories.

The farms made an amazing 2,471,242 pounds per employee, managing 105.1 cows per employee.

A Dairy Herd Management analysis of the data found that these farms collectively made almost 2 billion pounds of milk in the year of study. They generated $21,050,540 in milk profit over cost of production, or an average profit of $1.4 million per farm, not including non-milk income.