Dairy accounting

Farm banking expert Sam Miller of BMO Harris says making a dairy operation more profitable means looking at your farm’s biggest expenses and determining if there are ways to make small improvements. Every little gesture counts.

“A quarter and a half percent improvement, from an expense control perspective, in several different metrics can be big numbers and improve the bottom line.”

Labor continues to be a high cost area for all sectors of agriculture. Dairy farmers are turning to technology and robotic milking systems to lighten the load – but like all things, it comes with an added investment.

“The difference between a robotic system and a more conventional type of rotary or parallel parlor system is the payback period, which is how long that loan is amortized. We really see probably 7 to 10 years for a robotic system.

Factors beyond the farm can also play a major role. About 17% of the milk produced in the United States today is exported.

“It’s more than a milk day, and because of that, we need these global markets, and we need them to be consistent. So when the dollar is stronger, it makes our dairy exports less attractive to a country. And when the dollar weakens, that helps from an export perspective and directly helps dairy farm prices.

No matter what the future holds, Miller says he remains optimistic for the next generation of dairy farmers — those committed to caring for animals and the land.


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