Profits, Costs, and the Changing Structure of Dairy Farming
by
James MacDonald,
Erik O'Donoghue,
William McBride,
Richard Nehring, Carmen Sandretto, and
Roberto Mosheim
Economic Research Report No. (ERR-47) 41 pp, September 2007
Cover image for err47
U.S. dairy production is consolidating into fewer but larger farms. This report uses data from several USDA surveys to detail that consolidation and to analyze the financial drivers of consolidation. Specifically, larger farms realize lower production costs. Although small dairy farms realize higher revenue per hundredweight of milk sold, the cost advantages of larger size allow large farms to be profitable, on average, even while most small farms are unable to earn enough to replace their capital. Further survey evidence, as well as the financial data, suggest that consolidation is likely to continue.
Keywords: Farms, dairy, costs, production, cows, milk prices, structural change, labor, cost advantages, dairy enterprises, dairies, milk, large dairy farms, agricultural productivity, consolidation, farm structure, economies of scale, economies of size, dairy farm
In this publication...
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Report summary, Pdf file 126 kb | HTML
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Abstract, Acknowledgments, Contents, and Summary, Pdf file 73 kb
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Introduction, Pdf file 44 kb
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Changes in the Size and Location of U.S. Dairy Farms, Pdf file 70 kb
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Scale Economies and Structure in Dairy Farming: Background, Pdf file 61 kb
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What Can ARMS Tell Us About Scale Economies in Dairy Farming?, Pdf file 84 kb
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What Do Econometric Estimates Tell Us?, Pdf file 66 kb
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Using Investment Data To Supplement Cost Estimates, Pdf file 66 kb
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Effects of Structural Change: Manure and Excess Nutrients, Pdf file 81 kb
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Conclusions, Pdf file 44 kb
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References, Pdf file 50 kb
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Appendix: Data Sources, Pdf file 55 kb
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Entire report, Pdf file 2,400 kb
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