Will Large Dairy Farms Get Larger?

[nosmokes]

They will if we don't do something about it! Even though there is a huge glut of conventional milk on the market, Monsanto continues to push it's Posilac, the growth hormone which makes cows produce more milk, and then the industrial ag corps can get subsidies from the government when the price of fresh milk falls below a guaranteed high profit making point, plus they can still sell the dry milk product to food processors for more than chump change. No wonder the Farm Bill is second only to defense as the biggest expenditure of money, huh? Meanwhile, even as conventional milk backs up, organic milk is at a premium and supply can't keep up with demand in some parts of the country.WTF is wrong w/ this picture?
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original-cattlenet

Will Large Dairy Farms Get Larger?



On average, large dairy farms exhibit better financial performance than small. But ongoing structural change has led to even larger farms, with 5,000 and 10,000 cows. ERS’s financial database is not comprehensive enough to tell whether farms of that size have financial advantages over farms with 1,000 cows, but other evidence suggests that they might.



Specifically, patterns of expansion among large farms changed sharply in recent years, suggesting that the largest farms might have further cost advantages. Between 1992 and 1997, most capacity expansion at large farms occurred in farms with 1,000-3,000 head. But after 1997, most new capacity at large dairy farms was added on farms with more than 3,000 head, with some going to operations with over 10,000 head. Operators may have discovered ways to more effectively manage much larger dairy farms in recent years, and the bulk of new large farm investment appears directed at those much larger farms. In turn, those investments may place even greater cost pressures on smaller operations.



The improved efficiency of large farms frees resources for other uses and exerts downward pressure on milk prices. While the prices that dairy farmers pay for inputs like feed has continued to increase, efficiency improvements in dairy production have kept farm-level milk prices from rising. USDA’s index of prices paid for livestock inputs rose by 43 percent between 1992 and 2006. While farm-level milk prices fluctuated over the same period, they showed very little trend. That performance reflects steady improvements in genetics, feed formulation, equipment design, and management, as well as a shift of production from smaller to larger farms.



The average farm-level milk price in 2005 was $15.14 per hundredweight. Prices fell to $12.90 in 2006, before rising to $20 in June 2007. Higher prices in 2007 were driven by ethanol-fueled increases in feed prices and by greater world demand for dry dairy products. However, the cost relationships outlined in this article have not been fundamentally altered. Larger operations still have substantial cost advantages, and shifts of production to larger enterprises will place downward pressure on industry-wide costs and prices, thus offsetting some of the impact of any long-term increases in feed expenses.

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complete article here