May 18, 2016

Average Cost of Production Exceeds All-Milk Price All of 2015

 |  By: Anna-Lisa Laca

There’s no doubt farmers across the country are struggling at the current milk price. When asked how long their business could survive at the current milk price, 40% of the farmers included in a recent MILK Intelligence Survey said they could only remain in business for 1 year or less.

When looking at the cost of milk production per cwt released by the USDA Economic Research Service (ERS) compared to the all-milk price (chart above) there’s no question why that is: ERS data shows the cost of production exceeding the all-milk price by at least $4 all year. Keep in mind the ERS data includes opportunity cost for unpaid labor and capital recovery costs of machinery and equipment in the overhead costs category. Many other “cost of production” calculations don’t include those two items.