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Publication #AN215

Florida Dairy Farm Situation in 20091

Albert De Vries and Russ Giesy2

Summary

The global economic crisis is causing international shifts in supply and demand of milk products and inputs. Consequently, the average Florida farm milk price in 2009 is expected to be historically low while the cost of production remains relatively high. The total expected loss for the Florida dairy industry for 2009 is $99,000,000, or a loss of $709,000 per Florida dairy farm. The Florida dairy industry is facing a very difficult financial time.

Analysis

Florida ranks 19th in the US for total milk production. Approximately 2.1 billion pounds of milk are produced annually in Florida on approximately 140 dairy farms. Florida dairy farms employ approximately 2000 employees directly. Approximately an equal number of people are employed in the allied industry (feed, supplies, milk marketing) (Table 1).

Milk prices determine approximately 90% of revenues on Florida dairy farms. The projected average price Florida farmers will receive for their milk in 2009 is $17.08/cwt. One cwt equals approximately 11.6 gallons. Thus, the projected average price Florida farmers will receive for the milk they sell is $1.47/gallon. Revenues from the sales of cull cows and calves are estimated at $1.00/cwt. Total revenues on Florida dairy farms were approximately $526,000,000 in 2008, but are expected to decrease below $380,000,000 in 2009 as a result of very low milk prices.

The cost to produce milk is estimated at $23.00/cwt for 2009, which is slightly less than the all time high cost of $24 in 2008. Total cost to produce milk in Florida in 2009 is $470,000,000.

The difference between revenues and costs leads to an expected loss of $4.92/cwt of milk produced. In 2009, revenues are expected to be less than 80% of total cost (Table 2). The total expected loss for the Florida dairy industry for 2009 is $99,200,000, or $709,000 per Florida dairy farm. The depressed profitability is expected for dairy farms throughout the nation.

Figure 1. 

Average profit (loss) per month per Florida dairy farm, 2006 to 2009 (forecast).


[Click thumbnail to enlarge.]

References

De Vries, A., R. Giesy, M. Sowerby, and L. Ely. Dairy Business Analysis Project: 2007 Financial Summary. Univ. Florida Ext. Publ. AN213 (http://edis.ifas.ufl.edu/AN213)

Florida Department of Agriculture and Consumer Services. 2009. List of Florida Milk Producer Permits.

De Vries, A., R. Giesy, L. Ely, M. Sowerby, B. Broaddus, C. Vann. 2008. Dairy Business Analysis Project: 2006 Financial Summary. Univ. Florida Ext. Publ. AN196 (http://edis.ifas.ufl.edu/an196)

Gould, B.W. 2009. Understanding Dairy Markets. University of Wisconsin Dairy Marketing and Risk Management Program (http://future.aae.wisc.edu/). Accessed March 16, 2009

Tables

Table 1. 

Demographics of Florida dairy farms, 2006 to 2009 (forecast).

 

2006

2007

2008

2009 (forecast)

Number of dairy cows

132,000

125,000

120,000

118,000

Employees at dairy farms

2200

2083

2000

1967

Milk produced (billion lbs)

2,17

2,10

2,06

2,10

Number of dairy farms

150 145 143 140
Table 2. 

Profitability of Florida dairy farms, 2006 to 2009 (forecast)

 

2006

2007

2008

2009 (forecast)

FL milk price/cwt

$17.08

$22.98

$23.50

$17.08

Total revenue/cwt

$19.21

$24.72

$25.63

$18.08

Total cost/cwt

$19.95

$21.44

$24.02

$23.00

Profit (loss)/cwt

($0.74)

$3.28

$1.61

($4.92)

Profit (loss)/cow

($84)

$614

$320

($841)

Profit (loss)/farm

($74,000) $529,000 $268,000 ($709,000)

Profit (loss) all FL farms

($11,000,000) $77,000,000 $38,000,000 ($99,000,000)

Footnotes

1.

This document is AN215, one of a series of the Animal Sciences Department, Florida Cooperative Extension Service, Institute of Food and Agricultural Sciences, University of Florida. Original publication date March 2009. Reviewed January 2012. Visit the EDIS website at http://edis.ifas.ufl.edu.

2.

Albert De Vries, associate professor, Department of Animal Sciences; Russ Giesy, Diamond Rule Dairy Management Consulting Service, Leesburg FL; Florida Cooperative Extension Service, Institute of Food and Agricultural Sciences, University of Florida, Gainesville, FL 32611.


The Institute of Food and Agricultural Sciences (IFAS) is an Equal Opportunity Institution authorized to provide research, educational information and other services only to individuals and institutions that function with non-discrimination with respect to race, creed, color, religion, age, disability, sex, sexual orientation, marital status, national origin, political opinions or affiliations. For more information on obtaining other UF/IFAS Extension publications, contact your county's UF/IFAS Extension office.

U.S. Department of Agriculture, UF/IFAS Extension Service, University of Florida, IFAS, Florida A & M University Cooperative Extension Program, and Boards of County Commissioners Cooperating. Nick T. Place, dean for UF/IFAS Extension.