At last! – Dairies were profitable in 2013

Hoard's Dairyman: 

At last! – Dairies were profitable in 2013

Date: 
Fri, 06/06/2014

Accounting firm’s data says it was a decent year for a change. More of them are needed.

by Dennis Halladay, Hoard’s Dairyman Western Editor

dollar signsMilk producers made tangible progress last year in their uphill battle to recover from the financial disaster of 2008-09, according to summary data from the largest dairy accounting firm in the country. While it’s a start, most still have a long way to go to get back to premeltdown equity levels.

Average income and expense summaries just released by Genske, Mulder & Co. show that profitability was the broad norm for their clients in 2013 rather than the rare exception. Amounts varied widely between the seven Western states and two Plains states regions summarized by the firm, but all were in the positive column.

It is important to remember that those figures probably do not represent the U.S. dairy industry as a whole, because average herd size of dairies in the summary is roughly 10 times the national average. In addition, the figures do not include the costs of owner salary and debt principal repayment.

Even so, bottom lines in the black are beautiful things to finally see. Here is a breakdown of average profit levels for the firm’s clients in 2013, on a per-cow basis ranked from high to low:

Washington $636
California $337
Arizona $277
Idaho $270
Texas $261
Upper Midwest $201
Lower Midwest $180
Colorado $167
New Mexico $75

Washington and New Mexico are the outliers on this list, due primarily to income and feed costs. Average total income in Washington was almost $1 per hundredweight more than in New Mexico and total feed cost was more than $2 per hundredweight less.

Total cost of production per hundredweight also varied significantly, as seen in this list:

California $17.85
Washington $17.97
Idaho $18.47
New Mexico $19.32
Texas $19.36
Arizona $19.49
Colorado $20.16
Lower Midwest $20.77
Upper Midwest $20.99

So far in 2014, milk prices have been significantly higher and feed costs have been significantly lower, so producers have a great head start on even better profitability than last year.

Dennis blog footer

The author has served large Western dairy readers for the past 37 years and manages Hoard’s WEST, a publication written specifically for Western herds. He is a graduate of Cal Poly-San Luis Obispo, majored in journalism and is known as a Western dairying specialist.

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