The latest Zisk report projects profitability on dairy farms for 2025. It shows that U.S. dairy producers are expecting a profitable next 12 months, but as with previous reports, the picture isn’t equally as rosy for all producers.
While commercial dairy farms of nearly all sizes are expected to return to profitability in 2025, the correlation between farm size and profitability has never been clearer.
While farms milking fewer than 250 cows expect to return to profitability for the first time in three years, the correlation between size and profitability has never been clearer. Those that milk more than 5,000 cows will make more money on average than those with over 1,000 cows, that in turn expect to be more profitable than those with fewer than 1,000. Those with less than 250 cows will be the least profitable in an otherwise good year.
Given that previous reports have shown dairies milking fewer than 250 cows have seen two straight years of margin losses, the expected good milk prices in 2025 are unlikely to make up or allow for recovery of those losses.
The 2025 projections demonstrate the economies of scale that bigger farms have, both in their ability to lock in better future milk prices and lower feed costs. Dairy industry observers have been saying for some time that producers need to increase herd size, and the future economic model will be farms with more than 5,000 cows. This latest report suggests that the most economic size is probably closer to 10,000 cows for the future. Larger farms are of course more efficient, and there are now three farm groups milking more than 100,000 cows in the U.S., and the group of individual dairy owners milking more than 40,000 cows is growing each year.
The Northeast will be the second most profitable region overall, with average projected profits per cow of $1,320, driven by bullish numbers for farms in Maine and Rhode Island with New York state close behind. While New Hampshire, New Jersey and Massachusetts lag (smaller average herd sizes among the Zisk users reporting their data), overall, it looks to be an excellent year for this region, which includes Vermont, Maryland, Connecticut and Kentucky.
The Northwest is also expecting a strong year, with over $1,300 of profit projected per cow. Wyoming, Utah and Washington all expect to reach or exceed $1,500 profit per cow, and Colorado and Idaho also expect strong years. Users of Zisk in the Northwest tend to have larger farm sizes, which is strongly correlated with profitability.
The Southwest (including California) expects a strong year also, with average profits of $1,274 per cow, but Arizona dairies expect an even better year at $3,629 per cow. California and Nevada expect to be more profitable than the region as a whole, but Texas, Kansas and Oklahoma are about 10% lower than the average. New Mexico dairies are expecting to return just half of the profits of their neighboring states.
The Midwest is projecting $1,169 per cow, but Wisconsin and Illinois should do significantly better than that, while the other states (Michigan, Minnesota, Indiana, Missouri, Iowa and Nebraska) will be close to the average for the region. North Dakoa dairies are expected to return 20% below this average, at just $838 per cow.
Despite some changes in terms of which states and regions can expect to be more profitable, the trends seen in previous Zisk reports continue, but it is even clearer that bigger farms make more money, and farms with 250 cows or less need to find other and more consistent sources of income to stay alive.
Zisk is a downloadable app/platform that aggregates data from over half of the U.S. dairy herd and includes herd size, average basis and milk production. It is used by 4,423 farms owning over 4.8 million cows. As usage of the app continues to grow, this dataset is an increasingly reliable barometer of dairy sentiment and future profitability.
You can now read the most important #news on #eDairyNews #Whatsapp channels!!!
🇺🇸 eDairy News INGLÊS: https://whatsapp.com/channel/0029VaKsjzGDTkJyIN6hcP1K
