Estimation of risk management effects on revenue and purchased feed costs on US dairy farms1

Joleen C. Hadrich, Kamina K. Johnson

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

Variations in milk and feed prices directly affect dairy farm risk management decisions. This research used data from the 2010 US Department of Agriculture-Agricultural Resource Management Surveys phase III dairy survey to examine how risk management tools affected revenues and expenses across US dairy farms. The survey was sent to 26 states and collected information on costs and returns to individual dairy farms. This research used the information from milk sales, crops sales, feed expenses, and farm and operator characteristics, as well as the use of risk management tools. Matching methodology was used to evaluate the effect of 5 independent risk management tools on revenues and expenses: selling milk to a cooperative, using a commodity contract to sell grain, feeding homegrown forage at a basic and intensive level, and use of a nutritionist. Results showed that dairy farms located in the Midwest and East benefit from selling milk to a cooperative and using commodity contracts to sell grain. Across the United States, using a nutritionist increased total feed costs, whereas a feeding program that included more than 65% homegrown forages decreased total feed costs. Results point to benefits from educational programming on risk management tools that are region specific rather than a broad generalization to all US dairy farmers.

Original languageEnglish (US)
Pages (from-to)6588-6596
Number of pages9
JournalJournal of Dairy Science
Volume98
Issue number9
DOIs
StatePublished - Sep 1 2015

Fingerprint

risk management
Risk Management
dairies
income
dairy farming
Milk
Costs and Cost Analysis
Nutritionists
nutritionists
Contracts
products and commodities
milk
sales
cooperatives
Agricultural Resource Management Survey
feed prices
forage
milk prices
United States Department of Agriculture
Research

Keywords

  • Dairy
  • Matching methodology
  • Risk management

Cite this

Estimation of risk management effects on revenue and purchased feed costs on US dairy farms1. / Hadrich, Joleen C.; Johnson, Kamina K.

In: Journal of Dairy Science, Vol. 98, No. 9, 01.09.2015, p. 6588-6596.

Research output: Contribution to journalArticle

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