February 8, 2018

Cost of Production Outpaces All-Milk Price, Again

 |  By: Anna-Lisa Laca

On Thursday, USDA released the dairy cost of production report for 2017. Ranging each month from $21.72 to $23.06, the cost of producing one cwt of milk once again outpaced the all-milk price. The average all-milk price for the year was $22.27 per cwt.

Farmers are critical of USDA’s cost of production figures, saying they are unrealistic. It is important to note that USDA’s cost of production includes opportunity cost for rented land and unpaid labor, and capitol recovery of machinery and equipment. Those are the three most disputed costs listed in the report. Still, the report is likely a fair representation of hard costs in farm country. USDA says it is based on the 2010 Agricultural Resource Management Survey of milk producers and updated using current USDA milk production per cow and production input indexes.

This annual report has been released each year since 2010 and in that time, the all-milk price has never been above the cost of production. Even in 2014.