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Profits, Costs, and the Changing Structure of Dairy Farming

Author

Listed:
  • 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.

Suggested Citation

  • MacDonald, James M. & O'Donoghue, Erik J. & McBride, William D. & Nehring, Richard F. & Sandretto, Carmen L. & Mosheim, Roberto, 2007. "Profits, Costs, and the Changing Structure of Dairy Farming," Economic Research Report 6704, United States Department of Agriculture, Economic Research Service.
    • Handle: RePEc:ags:uersrr:6704
    DOI: 10.22004/ag.econ.6704
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    References listed on IDEAS

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    1. Mosheim, Roberto & Lovell, C.A. Knox, 2006. "Economic Efficiency, Structure and Scale Economies in the U.S. Dairy Sector," 2006 Annual meeting, July 23-26, Long Beach, CA 21440, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. 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.
    3. 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 Economic Reports 33911, United States Department of Agriculture, Economic Research Service.
    4. 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.
    5. 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 9680, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
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