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Profits, Costs, and the Changing Structure of Dairy Farming

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Author Info

  • MacDonald, James M.
  • O'Donoghue, Erik J.
  • McBride, William D.
  • Nehring, Richard F.
  • Sandretto, Carmen L.
  • Mosheim, Roberto

Abstract

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.

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File URL: http://purl.umn.edu/6704
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Bibliographic Info

Paper provided by United States Department of Agriculture, Economic Research Service in its series Economic Research Report with number 6704.

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Date of creation: 2007
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Handle: RePEc:ags:uersrr:6704

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Related research

Keywords: Dairy farming; economies of scale; economies of size; dairy farm structure; milk costs; Farm Management; Industrial Organization; Livestock Production/Industries;

References

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  1. Tauer, Loren W. & Mishra, Ashok K., 2006. "Can the small dairy farm remain competitive in US agriculture?," Food Policy, Elsevier, vol. 31(5), pages 458-468, October.
  2. Ribaudo, Marc & Kaplan, Jonathan D. & Christensen, Lee A. & Gollehon, Noel R. & Johansson, Robert C. & Breneman, Vincent E. & Aillery, Marcel P. & Agapoff, Jean & Peters, Mark, 2003. "Manure Management For Water Quality Costs To Animal Feeding Operations Of Applying Manure Nutrients To Land," Agricultural Economics Reports 33911, United States Department of Agriculture, Economic Research Service.
  3. Gollehon, Noel R. & Caswell, Margriet & Ribaudo, Marc & Kellogg, Robert L. & Lander, Charles & Letson, David, 2000. "Confined Animal Production And Manure Nutrients," 2000 Annual Meeting, June 29-July 1, 2000, Vancouver, British Columbia 36382, Western Agricultural Economics Association.
  4. McBride, William D. & Greene, Catherine R., 2007. "A Comparison of Conventional and Organic Milk Production Systems in the U.S," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN 9680, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
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Citations

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Cited by:
  1. An, Henry, 2008. "The Adoption and Disadoption of Recombinant Bovine Somatotropin in the U.S. Dairy Industry," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6278, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  2. MacDonald, James M., 2011. "Why Are Farms Getting Larger? The Case Of The U.S," 51st Annual Conference, Halle, Germany, September 28-30, 2011 115361, German Association of Agricultural Economists (GEWISOLA).
  3. Sneeringer, Stacy E. & Hogle, Regina, 2008. "Variation in Environmental Regulations in California and Effects on Dairy Location," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 37(2), October.
  4. McBride, William D. & Greene, Catherine R., 2009. "Characteristics, Costs, and Issues for Organic Dairy Farming," Economic Research Report 55952, United States Department of Agriculture, Economic Research Service.
  5. Wolf, Christopher A. & Tonsor, Glynn T., 2013. "Dairy Farmer Policy Preferences," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 38(2), August.
  6. Ifft, Jennifer & Patrick, Kevin & Novini, Amirdara, 2014. "Debt Use By U.S Farm Businesses, 1992-2011," Economic Information Bulletin 165912, United States Department of Agriculture, Economic Research Service.
  7. Key, Nigel D. & Sneeringer, Stacy E., 2011. "Carbon Emissions, Renewable Electricity and Profits: Comparing Alternative Policies to Promote Anaerobic Digesters on Dairies," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103440, Agricultural and Applied Economics Association.
  8. Nehring, Richard F. & Vialou, Alexandre & Erickson, Kenneth W. & Sandretto, Carmen L., 2008. "Assessing Economic and Environmental Impacts of Ethanol Production on Fertilizer Use in Corn Production," 2008 Annual Meeting, February 2-6, 2008, Dallas, Texas 6736, Southern Agricultural Economics Association.
  9. Rodrigues, Jonathan & Baker, Gregory A., 2012. "Grameen Danone Foods Limited (GDF)," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IAMA), vol. 15(1).
  10. Volpe III, Richard & Park, Timothy & Hennessy, David & Jensen, Helen H., 2013. "Somatic Cell Counts in Dairy Marketing: Quantile Regression for Count Data," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 151425, Agricultural and Applied Economics Association.

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