Friday, December 9, 2016

Dairy Farmer Profit on One Gallon of Milk


This was based on average prices between 2009 and 2014.

6 comments:

  1. Devil's advocate here,

    So raise the consumer price specifically to go to farmer profit ?

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    1. I'll let the dairy farmers answer that. In our region in Colorado, milk is really cheap because of a humongous cheese factory nearby. Milk dumping goes on here and in Europe, there is dried milk powder which has uses including shipment abroad, and efficiency of production and robotics are advancing around the world. It's a tough industry and just as in gentle beef production, the gentle milk producer is seldom rewarded in price.

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    2. But I thought price was determined by market conditions ? In other words, if production price falls below market price, production shuts down. Right ? What would exist to circumvent that fundamental dynamic, otherwise ?

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    3. Because profit for a farmer is in flux. It becomes an average profit over a number of years that perhaps matters most, depending upon a particular farmers credit condition, or outright ownership, etc. And many, many dairy farmers have gone under and shut down these past several years, so yes, that happens, too.

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  2. The cost of production cited above includes the farmers "opportunity cost" of farming as far as I can tell. This means he/she is making an income relative to what else they could be doing PLUS the $.03 per gallon.

    They are making an accounting profit and just over break even in economic terms.

    I am open to correction if wrong.

    Love the site. Glad it is up and running again! :)

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    1. Thanks so much for weighing in, Gene, and it's good to hear from you again. I resumed doing news a number of months ago, and transferred back to this URL in April 2016, having some regrets about quitting. Now, I'm putting my time towards news instead of writing, however, as compared to the .com site.

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