Gross not quite so ‘gross’

DairyBusiness Communications calculated its annual gross income per cow estimates, using preliminary annual milk price and milk production estimates. The good news is your cows put a little more on the gross income side of the ledger.

By Dave Natzke

If it’s any consolation, your cows gave you more money to pay bills in 2010. Whether you can consider last year a “recovery” depends on just how big those bills were.

Using USDA’s monthly milk production and price estimates, DairyBusiness Communications editors returned to their Excel spreadsheets to calculate the “average” gross income from milk sales generated annually, based on production per cow and the all milk price in major dairy states. (Individual information for major dairy states will appear in the March 2011 issue of Eastern DairyBusiness.)

Based on those preliminary estimates the “average” U.S. cow produced about 21,153 lbs. of milk in 2010, up from 20,576 lbs. in 2009, a 577-lb. gain. USDA’s preliminary 2010 all milk price was $16.29/cwt., up $3.46/cwt from 2009. The result: an $805 increase in gross income per cow, with an estimated $3,446 generated in milk sales in 2010, compared to $2,641 in 2009.

How does 2010 gross income per cow compare to other previous years? Less than 2007 and 2008, for sure, when milk prices averaged $19.21/cwt. and $18.33/cwt., and gross income averaged about $3,881 and $3,763 per cow, respectively. Average gross income per cow was $2,574 in 2006; $2,976 in 2005; and $3,050 in 2004.

“Averages” tend to level out peaks and valleys, but individual state information provides some remarkable disparity. For example, among the 23 major dairy states, there’s a $1,500 spread between the state with the lowest gross milk income per cow in 2010 (Missouri, at $2,429) compared to the highest (Michigan, at $3,930).

What’s ahead

Looking ahead to 2011, milk production per cow could be impacted by feed prices, but USDA’s latest estimate puts it at about 21,425 lbs. per cow. The agency’s January forecast put the mid-range for the 2011 all milk price at about $16.30/cwt., virtually unchanged from 2010. With the slight increase in milk production, gross income per cow should be about $3,488, about $40 more than 2010.