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Business Summary New York State 2004

Author

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  • Knoblauch, Wayne A.
  • Putnam, Linda D.
  • Karszes, Jason

Abstract

Business and financial records for 2004 from 200 New York dairy farm businesses are summarized and analyzed. This analysis demonstrates the use of cash accounting with accrual adjustments to measure farm profitability, financial performance, and costs of producing milk. Traditional methods of analyzing dairy farm businesses are combined with evaluation techniques that show the relationship between good management performance and financial success. The farms in the project averaged 334 cows per farm and 22,070 pounds of milk sold per cow, which represent above average size and management level for New York dairy farms. Net farm income excluding appreciation, which is the return to the operator's labor, management, capital, and other unpaid family labor, averaged $200,863 per farm. The rate of return to all capital invested in the farm business including appreciation averaged 11.3 percent. Differences in profitability between farms continue to widen. Average net farm income excluding appreciation of the top 10 percent of farms was $838,746, while the lowest 10 percent was a negative $11,854. Rates of return on equity with appreciation ranged from 46 percent to negative 11 percent for the highest 10 percent and the lowest 10 percent of farms, respectively. Large freestall farms averaged the highest milk output per cow and per worker, the lowest total cost of production and investment per cow, and the greatest returns to labor, management and capital. Farms milking three times a day (3X) were larger, produced more milk per cow and had higher net incomes than herds milking two times per day (2X). Operating costs per hundredweight of milk were $0.08 per hundredweight higher for 3X than 2X milking herds, while output per cow was 3,950 pounds higher. In 2004, farms supplementing the herd with bovine somatotropin (bST) attained higher rates of milk production per cow, had larger herds and were more profitable than farms not supplementing with bST for all measures of profitability. Farms adopting rotational grazing generally produced less milk per cow than non-grazing farms but had lower costs of production and higher profitability. One should not conclude that adoption of these technologies alone were responsible for differences in performance.

Suggested Citation

  • Knoblauch, Wayne A. & Putnam, Linda D. & Karszes, Jason, 2005. "Business Summary New York State 2004," Research Bulletins 122088, Cornell University, Department of Applied Economics and Management.
  • Handle: RePEc:ags:cudarb:122088
    DOI: 10.22004/ag.econ.122088
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    Cited by:

    1. Alvarez, Antonio & del Corral, Julio & Tauer, Loren W., 2012. "Modeling Unobserved Heterogeneity in New York Dairy Farms: One-Stage versus Two-Stage Models," Agricultural and Resource Economics Review, Cambridge University Press, vol. 41(3), pages 275-285, December.
    2. Loren W. Tauer, 2009. "Estimation of Treatment Effects of Recombinant Bovine Somatotropin Using Matching Samples," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 31(3), pages 411-423.
    3. Schmit, Todd M. & Chang, Hung-Hao & Boisvert, Richard N. & Tauer, Loren W., 2007. "Quantifying the Contributions to Dairy Farm Business Risk: Implications for Producer's Risk Management Strategies," EB Series 121879, Cornell University, Department of Applied Economics and Management.
    4. Nicholson, Charles F. & Stephenson, Mark W., 2006. "Financial Performance and Other Characteristics of On-Farm Dairy Processing Enterprises in New York, Vermont and Wisconsin," Research Bulletins 121583, Cornell University, Department of Applied Economics and Management.
    5. Chang, Hung-Hao & Schmit, Todd M. & Boisvert, Richard N. & Tauer, Loren W., 2007. "Quantifying Sources of Dairy Farm Business Risk and Implications for Risk Management Strategies," Working Papers 127012, Cornell University, Department of Applied Economics and Management.

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    Keywords

    Livestock Production/Industries;

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