Summary of Ontario 2011 Dairy Farm Income and Expenses
Some Ontario dairy farms net $1,400 more per cow or $6.85 more per hectolitre per year compared with other dairy farms. These operations ship more milk per cow and have lower costs per hectolitre of milk produced than farms with average or below-average milk production.
The 2011 Ontario Dairy Farm Accounting Project (ODFAP) reported these differences in a recently released report. The report summarizes average income and expenses of 61 Ontario dairy farms, along with key production information. Dairy Farmers of Ontario publishes this financial snapshot of selected dairy farms annually. The full report is available through the DFO website. Summaries include reports on a per-cow and per hectolitre basis.
The report also summarizes and reports the top 15 and bottom 15 farms separately. The ODFAP report lets you compare and contrast the results between the three groups. It provides benchmarks to compare your farm with the three groups in the report. Even if you have not looked at the ODFAP report, your banker almost certainly has.
The 61 farms had an average net return from their dairy enterprises of $2,348 per cow or $29.88 per hectolitre. The top 15 farms had a net return of $3,015 per cow or $34.53 per hectrolitre, while the bottom 15 farms returned a net of $1,615 per cow or $27.68 per hectolitre.
There are no large differences in expenses between the average and top groups in the per-cow summary. The two groups had similar expenses of about $4,500 per cow, while the bottom group's expenses were about $450 to $500 lower per cow.
The big difference was on the revenue side. The top 15 group shipped 850 litres more milk per cow than the average group, and 2,550 litres more per cow than the bottom group. The result was $600 more in milk sales per cow for the top farms compared with the average group, and $1,800 more than the lowest group.
When you look at income and expenses on a per-hectolitre basis, key differences stand out. The bottom group actually had the highest value milk per hectolitre as a result of higher component tests.
Purchased feed costs per hectolitre were similar across the three groups. However, costs to produce home-grown feed were more than $6 per hectolitre lower for the top group compared with the bottom group. Making up 60 per cent of the difference were lower field machinery repair costs, and fuel and lubricant expenses.
Building and barn equipment repairs cost the bottom group $1.07 more per hectolitre than the average and $2.25 per hectolitre more than the top group.
Several items are lumped together as Other Overhead Costs. Included are insurance, telephone, electricity, taxes, hardware and car expenses. There was a range of more than $3 per hL shipped across the three groups.
While the ODFAP report does not tell you the full story behind all the numbers, it does give an interesting financial snapshot of the different groups.
The average farm in this study reported 86 cows, milking plus dry, and required the equivalent of 2.4 full-time people to operate. The bottom 15 group had 47 cows and had 1.9 full-time people, while the top group had 163 cows and operated with the equivalent of 2.7 full-time people.
On average, the 61 farms required 1.28 hours of labour for each hectolitre of milk shipped. The bottom group used 1.92 hours of labour for each hectolitre shipped. In contrast, the top group needed only 0.68 hours of labour.
Over the last 20 years, Ontario dairy farms have dramatically improved labour efficiency. Only half as much labour was needed to produce a hectolitre of milk in 2011 compared with 1991. Milk production per cow is up 40 per cent, and average herd size has increased 60 per cent. Today's typical Ontario dairy farm ships 2.3 times more milk than it did 20 years ago.
The full ODFAP report is available on the Dairy Farmers of Ontario website at www.milk.org/Corporate/pdf/Publications-ODFAPReport.pdf.
2011 Revenue and Expenses per Cow
2011 Revenue and Expenses per Hectolitre Shipped
* includes milk & livestock marketing, bedding, stable & milk house supplies, registration, DHI, building rent
**includes insurance, telephone, electricity, taxes, hardware, car expenses
Source: Ontario Dairy Farm Accounting Project, 2011, Dairy Farmers of Ontario, www.milk.org/Corporate/pdf/Publications-ODFAPReport.pdf
Trends in Ontario Dairy Herds 1991-2011
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