Business Summary New York State 1995

Business and financial records from 321 New York dairy farm businesses are summarized and analyzed. This analysis demonstrates the use of cash accounting and accrual adjustments to measure farm profitability, cash now, financial performance, and costs of producing milk. Traditional methods of analyzing dairy farm businesses are combined with improved evaluation techniques to show the relationship between good management performance and financial success. The farm in the project averaged 160 cows per farm and 20,269 pounds of milk sold per cow in 1995, which are above the average size and management level of all 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 $50,593 per farm. The rate of return including appreciation to all capital invested in the farm business averaged 5.1 percent in 1995. Differences in profitability between farms continues to widen. The top 10 percent of farms average net farm income was $241,346, while the lowest 10 percent was a negative $25,068. Rates of return on equity ranged from 22 percent to negative 35 percent from the highest 10 percent to the lowest 10 percent of farms. Farms adopting bovine somatotropin (bST) experienced greater increases in milk production, had larger herds and were more profitable than farms not adopting bST. Farms adopting rotational grazing generally produced less milk per cow than non-grazing farms, but differences in cost of production and profitability were not significant Large freestall farms averaged the highest milk output per cow and per worker, the lowest total cost of production and invesunent 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 were more profitable than herds milking two times per day (2X). Operating cost per cwt. of milk was similar for 3X and 2X milking herds.