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.
Good info Rachel and good additions Jim!
For those in the area, you have a great opportunity to meet and tap into Jim’s great wealth of knowledge/experience on 12/6/14: http://www.missourilivestock.com/Forages_Section_Speakers.html
I had the opportunity to take in several hours of his presentation at a fencing company’s customer appreciate day last year. I was so impressed I bought and have enjoyed (several times) his audio book:
Kick the Hay Habit (A Practical Guide to Year-around Grazing) Audiobook (6 Compact Disc Set) and likely can get it at his website:
http://www.americangrazinglands.com/
No affiliations with any of above, but think all are great assets!
Also, I have friends that MIG dairy farm here in SE MO and have learned a great deal from them. Always tell others considering MIG to make friends with a dairy that is doing it as the dairies have great feedback system (milk production) to let the know what does and does not work in their area.
Rachel, nice article and I concur with Jim’s opinion.
Also, in a study done a few years back, I compared MIG, Conventional and Continuous grazing and found MIG to be more sustainable than conventional/continuous in five (out of nine) indicators: water, soils, biodiversity, financials and animal husbandry.
Hi Juan,
Thanks for your kind words. Your study sounds interesting. We’d be interested in learning more (Kathy’s on the phone as I type!). Any info you can share?
Happy Holidays,
Rachel
Hi Rachel, Another good article on the bottom line value of grazing vs. conventional dairy farming. The sad thing is Dr. David Zartman at Ohio State University reported essentially the same thing as far back as the late 1980s. U of Wisconsin found the same results and published them back in the early to mid-1990s. U of Missouri published similar reports before I left there in 2003. This sort of info and the known economic response has been around for decades now.
The Big Question is why hasn’t the entire industry moved towards grass-based dairy production in light of such significant differences in profitability and environmental benefits?
I see two main road blocks. For the farmer, I think it the fear of change more than any other factor. For the overall dairy industry, there are too many supporting businesses and services with vested interest in maintaining the status quo. As the profit margin grows for the farmer, it usually means someone else is making less money in the associated industries. Our ‘friends’ in agri-business have little motivation to change production models because it means fewer inputs the farmer needs to purchase.