What are producers projecting for 2024 profits?
Zisk reports expectations for U.S. milk prices
For the third year in a row, the Zisk App, a dairy profitability predictor, shows that dairy producers can expect a profitable year, although much less so than for the previous two years. The report shows clearly more than previous Zisk reports that in 2024 size matters; the bigger the farm, the more money they are making per cow, and those with less than 250 cows are struggling.
While market prices going forward are not favorable, the report shows how many dairies have guaranteed profits by locking in their prices, especially the larger ones, and this is increasingly making a difference over those who don’t have the experience or access to these market tools.
Zisk is an app and data platform that has now been downloaded by more than 4,000 farm owners, representing 4.2 million cows, or 45% of the U.S. herd. As such, aggregating the data from all those farms shows some fascinating insights, specifically because the report includes herd size, average basis, milk production and herd size for an overall trend report showing what to expect in 2024. The report is available for free online at Ziskapp.com
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It is clear to anyone in the dairy industry that herd sizes will continue to increase, but the Zisk report shows that farms with more than 5,000 cows (averaging more than 13,000 cows in this report) are making the most money, more than those with fewer cows, but even those with more than 1,000 cows are much more profitable than farms with less. This year’s data shows, more than any previous Zisk report, that the bigger farms have lower costs, better prices and economies of scales, and expect to earn more money per cow.
2024 U.S. profit projections by herd size (via Zisk)
The Southeast expects to be the most profitable region in the U.S. in 2024, with an average projected profit of $884 per cow. While smaller farms, those with less than 250 cows, expect to continue to incur losses, the entire region’s overall profit per cow expects to be similar to the previous year, led by Florida and Georgia, whose herds are increasingly dominated by farms with over 5,000 cows. Many of the other Southeast region states in contrast are projecting losses, particularly Alabama and Arkansas, reflecting their small average herd sizes.
The Northwest will be the second most profitable overall, projecting $769 per cow, but as in previous years’ reports, the smaller herds will make much less. It is interesting to see that Washington herds (average size of 1,650 cows) are projecting $799 per-cow profits, and Idaho with almost twice the average size expecting $741 per cow.
For states with larger herds, Arizona is expecting an average profit per cow of nearly $835 and Texas over $608, with average herd sizes over 4,340 and 3,114, respectively. The least profitable region for producing milk in 2024 will be the Northeast, although Maryland is projecting the highest profit per cow in the region despite an average herd size of 385. Massachusetts, New Hampshire, New Jersey and Kentucky expect some of the lowest average profits in the U.S. in 2024. As a region, the Northeast was also the least profitable in 2023.
Zisk App (Sponsor)
Zisk is the fastest-growing dairy app in the world, now used by 4,094 U.S. dairy farms milking nearly 4.2 million cows. The average user visits the app more than four times per day. Download the app and start projecting your farm’s profit today.
Summary
The trends reported last year by Zisk remain and are reinforced for 2024. Farms are getting larger; larger farms are more profitable. Their economies of scale allow them to produce milk more cheaply and access to lock in better prices and markets. In markets where losses might be expected, the use of hedging and forward contracts for feed and selling milk has never been more important and will distinguish those who survive the upcoming bumpy milk markets.
Written by Aidan Connolly, owner of AgriTech Capital LLC based in Wilmington, North Carolina.