Larger operations squeeze out more milk at lower cost
Costs of production for U.S. milk decline as the size of the dairy operation (measured by the number of cows) increases. Based on 2013 data, average total economic costs of milk production—a measure that includes the opportunity costs of land, labor, and other owned resources—fell by nearly 60 percent, from an average of about $50 per hundredweight (cwt) for producers with fewer than 50 cows to about $20 per cwt for those with 1,000 cows or more.
Average costs are lower on larger farms because fixed cost items, such as management, land, and other resource costs, are spread across a larger number of cows, and because average output per cow increases along with farm size. Mean output per cow was just over 15,000 pounds among operations with less than 50 cows, while operations with 1,000 or more head averaged more than 23,000 pounds per cow.
Higher milk yields on larger farms stem from factors such as better breeding, nutrition, and health management, as well as the ability to access competitively priced supplies of high quality feed inputs.
The FlickrCC photographer, James Wheeler, said this about his photograph:
Took this photo in southern Yunnan, China, in a small town just before the Burma border crossing. The electricity was unreliable and the town was missing many of the “comforts” of development, like indoor plumbing and refrigeration. They lived a simple life raising their crops and tending to livestock, much as they have for hundreds of years. (May 2007)
Again and again we see that in agricultural commodities like corn, the best cure for high prices is high prices. The U.S.’s rapid ramp up in ethanol production created a sudden demand for corn, but now five to six years out, we, along with the rest of the world, have responded by producing more corn to cash in on the high corn prices of recent years.
Now, with low corn prices, ethanol producers will be more profitable and even Brazil, the king of sugar cane ethanol production, is considering turning more of their corn crop into corn ethanol.
The remainder of this post is from the USDA:
Global corn ending stocks forecast to be the highest in 15 years
Global corn stocks are forecast to rise to the highest level in 15 years by the end of 2014/15 (September/August), leading to downward pressure on U.S. and global corn prices. Stocks fell to relatively low levels during 2003/04-2006/07, prior to the 2008 spike in world commodity prices, but are now forecast to reach 188.1 million tons in 2014/15, just 3 percent below the recent high of 194.4 million tons in 1999/2000. Since 2008/09, world corn production has exceeded total consumption in 5 out of 7 years.
In addition to the United States and China—the two largest global producers and consumers of corn—production and stocks have been generally rising in Brazil, Russia, and Ukraine—countries that are also playing an expanding role as corn exporters. With a second consecutive above trend U.S. corn harvest forecast for 2014/15, the United States is expected to account for most of the 8-percent increase in global corn stocks forecast in 2014/15.
With growing inventories, the U.S. season average farm price of corn is expected to decline to $4.00 per bushel, down 10 percent from $4.45 per bushel in 2013/14, and 42 percent from $6.89 per bushel in the U.S. drought year of 2012/13.
Food inflation figures have stabilized or become less volatile in recent years, as you can see in this graph.
From this week’s print edition of The Economist
comes this great graph (above) using data from the recent “Agricultural Outlook, 2014-2023” from the OECD and FAO.
OECD Report here: http://www.oecd.org/site/oecd-faoagriculturaloutlook/
This is an interesting heritage goose breed.
Photo Flickr CC by Charles Strebor. Cape Barren Geese at Churchill Island Heritage Farm in Australia.
Cape Barren goose is a greyish Australian goose, Cereopsis novaehollandiae, having a black bill with a greenish cere
[Named after Cape Barren Island in the Bass Strait]