Who knew, right? Well, except for all of us…but the details, the data, that is the good stuff. For example, did you know that the profitability per cow on a MIG dairy farm is $636, versus $464 for a conventional dairy farm?
But, we’re jumping ahead of ourselves here. Back in 1995, Dale Johnson of the University of Maryland started collecting economic information on 62 dairy farms each year, a mix of conventional confined dairy farms and management intensive grazing dairy farms (CC and MIG, respectively). In 2009, he crunched the data and came up with some really stunning facts.
So he could compare apples to apples, Johnson looked at the data on a per cow basis. The gross income per cow was $3920 on a CC farm, compared to only $3147 on a MIG farm. Overall, milk production on a CC farm is 33% higher, and gross income is 25% more. But, expenses were also that much higher on the CC farms, meaning that profits per cow were a heck of a lot lower. And, even though CC farms were larger, with more land, overall profitability was higher on the MIG farms, with overall per farm profits at $53,383 versus $47,826 for CC farms.
In case you’re curious as to why, there are a number of reasons. You can probably guess: costs on a MIG farm are lower. Labor costs are three times higher for CC farms than for MIG farms. While CC farmers are busy hauling feed to their cattle, MIG farmers let their grazing cows harvest their own feed and spread their own manure. It’s not just labor, though. Johnson found that veterinary bills, medicine costs, and breeding costs are all lower for MIG farms. MIG farms need less capital too, so that it’s easier for a farmer to start small, and cheap. There’s less need for large and costly equipment.
Here’s another place where MIG farms make more money, leading to a healthier bottom line: their animals are healthier. Since they have lower culling rates (33% on CC, and 20% or less on MIG, according to other sources), MIG farms don’t have to replace as many of their milkers, and they have more high quality animals that can be sold for a profit.
Because MIG farms are tied to feeding their herd directly from grazed forages, the land base dictates the size of the farm much more than a farm which can truck in feed. But being small doesn’t mean profitability is out of the question. Year over year, there’s less risk in MIG than in CC. In three out of every four years, MIG farms have an income of at least $36,000, while CC farms are assured of only $26,000.
This paints a rosy picture for MIG dairy farms, especially compared to their CC cousins. But the bottom line for you might be different. It’s always a good idea to review your own financial data and if you haven’t talked to an agricultural economist lately, you might want to. There are great ones in Extension offices all over the place.