2017 Ohio Farm Business Summary

Transcription

1 OHIO STATE UNIVERSITY EXTENSION 2017 Ohio Farm Business Summary Dairy Enterprise Analysis with Benchmark Reports farmprofitability.osu.edu

2 Our Thanks To: The professionals who worked with farms and completed the analyses included in this summary: Christina Benton, Program Assistant, Ohio State University Extension Haley Shoemaker, Program Coordinator, Ohio State University Extension Don Garrett, Ag Data Solutions Dianne Shoemaker, Field Specialist, Ohio State University Extension Tom Weygandt, Tweyg Consulting, Ltd. Sharon Harris, Farm Business Analysis Technician The Center for Farm Financial Management at the Universityof Minnesota for selected text. Historic weather data and graphics providedby: Aaron B. Wilson, Byrd Polar & Climate Research Center, State Climate Office of Ohio, OSU Jim Noel, NOAA/NWS/Ohio River Forecast Center This work is supported by the Growing profit and risk management potential for Ohio and NY crop and livestock farms by expanding access to farm business analysis and benchmarking programs and resources (GRT ) Grant from the USDA National Institute of Food and Agriculture. The tables in this report were created using FINPACK and RankEm, copyrighted software of the Center for Farm Financial Management, University of Minnesota. Dianne Shoemaker, Field Specialist, Dairy Production Economics Ohio State University Extension. Haley Shoemaker, Program Manager, Farm Business Analysis For information about participating in the Ohio Farm Business Analysis program to analyze your farm s performance, visit our web site at: This data is the property of The Ohio State University and should not be reproduced without permission. The Ohio State University, 2018 Ohio State University Extension embraces human diversity and is committed to ensuring that all research and related educational programs are available to clientele on a nondiscriminatory basis without regard to age, ancestry, color, disability, gender identity or expression, genetic information, HIV/AIDS status, military status, national origin, race, religion, sex, sexual orientation, or veteran status. This statement is in accordance with United States Civil Rights Laws and the USDA. Roger Rennekamp, Associate Dean and Director, Ohio State University Extension For Deaf and Hard of Hearing, please contact Ohio State University Extension using your preferred communication ( , relay services,or videorelay services). Phone between 8 a.m. and 5 p.m. EST Monday through Friday. Inform the operator to dial Page 1

3 2017 Ohio Farm Business Summary Dairy Enterprise Analysis Table of Contents Pages Overview Dairy Summary Introduction Weather Summary Crop Yields and Prices Participating Farms Map Dairy Enterprise Analysis and Benchmark Reports Explanation Dairy Enterprise Analysis Average of all Farms, and High 20%, Conventional and Organic, Per Cow Average of all Farms, and High 20%, Conventional and Organic, Per Cwt Average of all Farms and High 20%, Conventional, Per Cow Benchmark Report, Conventional, Per Cow Average of all Farms and High 20%, Conventional, Per Cwt of Milk Benchmark Report, Conventional, Per Cwt Conventional Farms Sorted by Profitability Group, Per Cow...19 Conventional Farms Sorted by Profitability Group, Per Cwt Conventional Farms Sorted by Enterprise Size, Per Cow Conventional Farms Sorted by Enterprise Size, Per Cwt Benchmark Report, Conventional Herds with 50 to 500 Cows, Per Cow Benchmark Report, Conventional Herds with 50 to 500 Cows, Per Cwt Appendix Page 2

4 2017 Ohio Dairy Enterprise Analysis Summary This document contains summary information for 27 Ohio dairy farms that participated in the 2017 Ohio Farm Business Analysis and Benchmarking Program. These farms provided detailed financial and production information in order to complete a whole farm financial analysis and enterprise analysis for their dairy and crop enterprises. Data for more than 8,700 cows are included in this year s summary. Herd size ranged from 42 to more than 1,100 cows with six herds milking more than 500 cows. Twenty-five of the dairy enterprises are managed conventionally, and two are managed organically. Two of the conventional dairy enterprises utilized robotic milking systems s milk prices provided some relief from the very low milk prices experienced by dairy farmers in 2015 and However, it was also the beginning of a period of accelerated dairy farm exits. Milk Prices Most Ohio dairy farmers market their milk in Federal Order 33, although some does flow into the eastern and southern Orders. While still below the average cost of production, 2017 s milk prices provided welcome relief from 2015 and 2016 s lower prices. The Class III milk price averaged $16.17 per hundredweight (cwt.) for the year (Table 1.), $1.27 higher than 2016, and $6.17 per cwt. lower than Table 1: 2017 Monthly and annual average per cwt. milk prices for Federal Order Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec Avg Class III PPD SUP MPP month avg less 7.3% sequestration deduction Class 3.5% BF = Class III Producer Price Differential = PPD Statistical Uniform Price = SUP Margin Protection Program = MPP Find more information about Federal Milk Marketing Order 33 at Page 3

5 The Producer Price Differential (PPD) averaged $0.39 per cwt. for the year, up from $0.17 per cwt. in The PPD represents the difference in the price received for milk bottled and sold as fluid milk (Class I milk) and the value of Class III (manufacturing grade) milk. These dollars are shared among all Grade A dairy farmers marketing milk in Federal Order 33. The Class III price plus the PPD are added together, resulting in an average Statistical Uniform Price (SUP) of $16.57 per cwt. in The 2017 SUP was $1.54 per cwt. higher than 2016, a 10% increase from 2016 s average of $15.03 per cwt. The Statistical Uniform price represents the base price every dairy farm selling Grade A conventional milk in Federal Order 33 would receive, plus or minus component, somatic cell, and/or any quality or quantity adjustments. The average milk price received by all herds in the 2017 Ohio Summary was $18.80 per cwt. The 25 conventionally managed herds averaged $18.50 per cwt., ranging from $16.85 to $21.04 per hundredweight. The two organic herds received an average milk price of $32.96 per hundredweight, down $4.04 per cwt. from Feed Costs Feed costs represent the total cost of feeding milking cows, dry cows, and the replacement heifer herd. Feed costs include accrual adjusted purchased feed expenses (the cost of all purchased feed fed in 2017 whether it was pre-paid in 2016, paid in 2017, or not paid for until 2018) as well as the total direct and overhead cost of raised feed fed. Capturing the cost of shrink: Feed costs also include the cost of shrink, whether it is feed lost in the harvesting process, during storage, or shrink that occurs during the mixing and feeding of diets to the animals. Farms that complete enterprise analysis for their crop enterprises report total yields. Total costs of producing the crop are divided by those reported yields to obtain the cost per bushel or ton. Then total feed fed for each raised crop is calculated as follows, capturing any storage or feeding losses: Feed Fed = Beginning + Feed + Feed Feed Ending Inventory Bought Grown Sold Inventory The only feed cost that might not be included in total feed costs is any feed cost embedded in the cost of custom heifer rearing for a few farms. While this will slightly understate feed costs, it is included in the total cost calculations. Beginning in 2016, feed cost calculations for a home-raised feeds fed to the dairy herd are valued at total direct and indirect costs of production. Prior to 2016, the cost of raised feed also included a non-cash charge representing the value of labor and management for these crops. Excluding this charge makes it easier for participating dairy farmers to evaluate their cash costs of producing milk. Page 4

6 Feeding salable milk to calves: More farms are feeding fresh milk to their calves. If any of the milk fed to the calves could have been sold, the quantity and value of that milk is added to the milk sold per cow, and then charged as a feed expense at the average price per cwt received by the farm for milk sold. A charge is not included for milk fed to calves that could not have been sold (colostrum, transition milk, treated milk.) Feed costs vs. Net Return per Cow: Feed costs are the number one expense for dairy farms. Monitoring and controlling feed cost is clearly an important management function on dairy farms. However, lower feed costs do not necessarily gaurantee positive or higher net returns. In 2017, the 25 conventional dairy farms had an average feed cost of $9.58 per cwt. Figure one clearly shows that the farms with feed costs ranging from $8 to $10 per cwt achieved net returns ranging from ($86) to $1,200 per cow. Figure 1: Feed cost per Cwt vs. net return per cow, 25 conventional Ohio dairy herds, 2017 Improved Net Returns per Cow In 2017, net returns per cow rebounded from 2016, averaging $475 per cow for all herds, up from less than $95 (Table 2). With an average milk price of nearly $33 per cwt, the two organic herds do influence the average net return per cow. With an average milk price more than $14 per cwt lower, the 2017 net return per cow for the 24 conventionally managed herds was $424, compared to $34 per cow in Page 5

7 Table 2: Comparison of total cost of production per cwt. and net return per cow, average and high 20%, conventional and organic Ohio dairy farms, Average of all herds: Total cost $19.21 $20.42 $18.21 $16.85 $16.86 per cwt 1 Net return per cow 2 $544 $1,266 $36.42 $95 $475 Average of High 20% 3 Total cost $16.04 $18.14 $15.28 $14.91 $15.92 per cwt 1 Net return $1,501 $1,976 $905 $949 $1,141 per cow 2 1 Total cost per cwt. including revenue adjustments (income from cull cows, bull calf and other animal sales) before labor and management charge. 2 Before a labor and management charge. 3 Farms sorted by net return per cow 4 Home raised feed cost includes direct and indirect costs of production, but not a value of labor and management charge. We typically see a large range in net return per cow among the farms in the analysis was no exception with a difference of nearly $1,800 per cow (Table 3), ranging from a loss of $547 per cow to a positive net return of more than $1,200 per cow for the conventional herds. The 24 conventionally managed herds generated a net return of $424 per cow. Compared to 2016 when more than half of the conventional herds (17 of 31) experienced a negative net return per cow, only 2 herds experienced a negative net return per cow. Those conventional herds that generated positive net returns averaged $500 per cow. Net returns represent the return to the owner s unpaid labor and management as well as the capital invested in the dairy enterprise. The only non-cash charge in the dairy enterprise s expenses is a share of the annual depreciation charge for machinery and equipment (7%), titled vehicles (15%) and buildings and improvements (5%) for the raised feed and dairy enterprises. This charge represents the annual loss in value of these assets due to use, normal wear and tear, and age. Farms with low or negative net returns may not be able to make all scheduled principal payments and generate sufficient dollars to cover all operating expenses and family living needs. Consecutive years of negative net returns will cause the farm s working capital and net worth to decline. Page 6

8 Table 3: Average performance of 25 conventional Ohio dairy farms, range, and average performance of the high 20%, selected factors, 2017 Average of Range Average of 25 Farms High 20% 1 Number of , cows Milk sold 24,854 15,168 24,298 per cow 32,513 Feed cost per $9.58 $ 6.65 $9.33 cwt of milk 2 $13.75 Total cost per $16.78 $14.07 $15.72 cwt w/rev. adj. 3 $21.00 Net return per cow 4 $424 ($ 547) $1,216 $802 1 Farms sorted by net return per cow, 5 farms. 2 Includes feed costs for mature cows and raised replacements excluding custom raised heifers if feed is included in the custom raising charge. All raised feed is valued at total direct and overhead cost of production. 3 Total direct and overhead cost per cwt. including revenue adjustments (income from cull cows, bull calf and other animal sales) before a labor and management charge. 4 Before a labor and management charge. Herd Size All 27 herds averaged 325 cows, with herd size ranging from 42 to more than 1,100 cows. While the average numbers for all herds together are interesting, they have limited value when comparing performance of an individual herd with this broad range in herd sizes. To provide meaningful information for herds of different sizes, enterprise summaries per cow and per cwt. are included in this summary for herds with 50 to 100 cows, 100 to 200 cows, 200 to 500 cows, and herds with more than 500 cows. A benchmark report is also included for conventional herds with 50 to 500 cows. Page 7

9 2017 The Year in Review Weather Jim Noel, NOAA/NWS/Ohio River Forecast Center Ohio experienced one of its warmest years on record during By year s end, it was named the 5 th warmest on record for Ohio in 123 years. Rainfall was higher than normal, which resulted in 2017 being ranked the 7 th wettest year on record in Ohio. For comparison, 2016 was considered fairly normal. Breaking it into seasons, winter of 2017 brought warm and wet weather, with northeast Ohio experiencing the wettest weather, and southwest Ohio staying close to normal. Moving into the spring planting season, Ohio saw temperatures above normal with above normal rainfall. Ohio spring temperatures ranked 11 th warmest out of 123 years and rainfall was the 11 th wettest out of 123 years. By the summer growing season, conditions changed and it was fairly ideal for growing. Maximum temperatures were the 35 th coolest on record, while overall averages remained normal. As we moved into the fall harvest season, the weather turned warm again, resulting in the 13 th warmest on record. Rainfall remained slightly elevated but came in bursts and was the 23 rd wettest on record. The first half of September was abnormally cool, but the second half ended up being one of the warmest on record in Ohio. Temperatures for the first half of September were close to 10 degrees below normal but the second half temperatures were close to 10 degrees above normal yielding a near normal September. Even though there was some rain early in September of 2017, it turned very dry for the second half of September with most places coming in with below normal September rainfall. This certainly confused the crops for the end of the growing season. In summary, Ohio saw a warm and wet Source: National Climactic Data Center Page 8

10 Each year, no matter the statewide weather conditions, at least one of the farms participating in the analysis experiences local weather conditions that cause a steep decline in crop yields. This may cause farms that are otherwise profitable to experience a year of declines in working capital resulting from a decline in raised feed and crop inventories as well as low profitability resulting from higher feed costs on dairy farms. Lower crop yields increase the crops cost of production as total costs are divided by lower yields. This situation is then compounded by the need to purchase additional feed to compensate for lower raised feed production Ohio Regional Temperature Rankings Source: Byrd Polar and Climate Research Center/ Polar Meteorology Group Page 9

11 Crop Yields and Prices Table 4: Ohio Crop Yields and Marketing Year Prices as reported by the USDA National Agricultural Statistics Service in the Ohio Annual Bulletin (September 2017) Corn Yield bu/acre Corn Price $/bu 1 Soybean Yield bu/acre Soybean Price $/bu 1 Wheat Yield bu/acre Wheat Price $/bu 1 Alfalfa Hay tons/ac Alfalfa Hay $/ton Marketing year average price: Participating Farms In 2017, participating dairy farms were located in 14 counties. The majority of farms were located in the northeast part of the state. Figure 2: Locations of the 27 Ohio dairy farm businesses participating in 2017 Page 10

12 Dairy Enterprise Analysis Reports The Dairy Enterprise Analysis reports show the average physical production, gross margin over purchase costs, direct costs, overhead costs, and net returns on a per cow or per hundredweight (cwt) basis. Information is presented for the average of all farms and the High 20% sorted by net return per cow. Gross Margin is the accrual gross value added by the enterprise. It includes income from sale of offspring and livestock products, cull income, non-cash transfers to other enterprises, and the value of production used in the home or for feed. It also includes the value of the livestock inventory change from the beginning to the end of the year. Inventory changes are calculated using the cost-basis balance sheet, and each farm s per-head values for their breeding livestock inventories are held constant from the beginning through the end of the year. The cost of livestock purchased and the value of any animals transferred in are deducted from gross returns. Net Return is the amount contributed by a unit of the enterprise toward operator labor, management, and equity capital. Any wages and benefits paid to the operator are removed from labor costs (and added to Labor and Management Charge) so that all farms are on equal footing. Net Return over Labor and Management is the return remaining after compensating the operator for unpaid labor and management. This is the per-unit return to equity capital. Labor and Management calculation: Management is calculated at 5% of the Value of Farm Production (VFP) Labor is valued at $13.50 per hour for 3,000 hours annually (one operator) The Value of Farm Production is the farm s total income less the cost of purchased feed. Example: Management at 5% * $950,000 VFP = $47,500 Labor of 3,000 hrs * $13.50 =$40,500 $88,000 Cost of Production shows the average cost per unit in each cost category. Total direct and overhead expense per unit is the breakeven price needed to cover cash costs and depreciation. With Other Revenue Adjustments is the breakeven price adjusted for cull sales, other offspring sales, the cost of replacement stock, and any other miscellaneous income. This assumes that some costs can be covered by these other income sources. With Labor and Management is the final breakeven price to provide a labor and management return for the operator(s). Other Information contains both economic and technical efficiency measures for the enterprise. Rounding of individual items for the report may cause minor discrepancies with the calculated total. Page 11

13 How to Use Benchmark Reports Benchmark reports follow each enterprise summary, both per cow, and per cwt. These reports include information on 37 income, expense, and efficiency measures from the dairy enterprise analyses. Benchmark reports allow farms to compare their performance against other Ohio farms. Farms that complete an analysis receive benchmark reports personalized for their farm. These reports include their farm s dairy enterprise numbers in a My Farm column next to the Group Median column, and the corresponding percentiles are highlighted for each of the 34 items. Managers can quickly see where they are doing well and where they have opportunities for improvement. The Benchmark reports are generated using the RankEm software from the University of Minnesota s Center for Farm Financial Management. Benchmark reports include the median value (half of the data points were higher, half of the data points were lower which will frequently be at least slightly different from the average) for each of the 34 income, expense and efficiency measures. For each measure, the corresponding data is sorted from lowest to highest. Then the median value of for each 10% grouping of the data set is sorted into the 10%, 20%, 30%...100% columns of the table. Each line is calculated separately. In other words, the 10% column does not represent the bottom 10% of all farms, nor does the 100 th percentile group include only the top performing farms. An individual farm may be in the 80 th percentile for Gross Return, but in the 30 th percentile for feed cost. Typically, a farm s values will be scattered in multiple percentile groups (columns) across the chart. Hired Labor: Hired labor is listed on line 13 (the first line of overhead expenses). Ohio treats hired labor as a direct expense to the dairy enterprise; Minnesota treats it as an overhead expense. While it is listed in these benchmark reports after total direct expenses, it is included in the direct expense total. Utilities: Utilities are listed on line 16 of the benchmark reports. Ohio treats utilities as a direct expense to the dairy enterprise; Minnesota treats it as an overhead expense. While it is listed in these benchmark reports after total direct expenses, utilities are included in the direct expense total. Building Leases: Not enough farms had building leases to include data on benchmark reports. Corn, Corn Silage, and Alfalfa Fed: These numbers do not reflect all of the corn, corn silage, or alfalfa (hay and haylage) fed on the farms in the analysis. It would include all of the corn, corn silage or alfalfa raised on a farm which was fed in Purchased corn, corn silage, or alfalfa is often included as a purchased feed cost on some farms. Page 12

14 Livestock Enterprise Analysis 25 Conventional and 2 Organic Herds, Sorted By Net Return Dairy -- Average Per Cow Avg. Of All Farms High 20% Number of farms 27 6 Quantity Value Quantity Value Milk sold (cwt) 24, , , , Dairy Calves sold (head) Transferred out (head) Cull sales (head) Other income Purchased (head) Inventory change (head) Gross margin 5, , Direct Expenses Protein Vitamins Minerals (lb.) , , Corn (bu.) Corn Silage (lb.) 23, , Hay, Alfalfa (lb.) 2, , Hay, Grass, Organic (lb.) , Other feed stuffs (lb) 5, , Breeding fees Veterinary Supplies Contract production exp Fuel & oil Repairs Custom hire Hired labor Utilities Hauling and trucking Marketing Bedding Total direct expenses 4, , Return over direct expense , Overhead Expenses Interest Mach & building depreciation Miscellaneous Total overhead expenses Total dir & overhead expenses 4, , Net return , Labor & management charge Net return over labor & mgt Cost of Production Per Cwt. Of Milk Total direct expense per unit Total dir& overhead expense per unit With other revenue adjustments With labor and management Est. labor hours per unit Other Information Number of cows Milk produced per cow 24,608 25,111 Total milk sold 7,987,148 4,812,440 Lb. of milk sold per FTE 1,280,903 1,795,595 Culling percentage Turnover rate Cow death loss percent Percent of barn capacity Feed cost per day Feed cost per cwt. of milk Feed cost per cow 2, , Hired labor per cow Avg. milk price per cwt Milk price / feed margin Ohio Farm Business Analysis Program Page 13

15 Livestock Enterprise Analysis 25 Conventional and 2 Organic Herds, Sorted By Net Return Dairy -- Average Per Cwt. Of Milk Avg. Of All Farms High 20% Number of farms 27 6 Quantity Value Quantity Value Milk sold (cwt) Dairy Calves sold (head) Transferred out (head) Cull sales (head) Other income Purchased (head) Inventory change (head) Gross margin Direct Expenses Protein Vitamins Minerals (lb.) Corn (bu.) Corn Silage (lb.) Hay, Alfalfa (lb.) Corn Silage, Organic (lb.) Hay, Grass, Organic (lb.) Other feed stuffs (lb) Breeding fees Veterinary Supplies Contract production exp Fuel & oil Repairs Custom hire Hired labor Utilities Hauling and trucking Marketing Bedding Total direct expenses Return over direct expense Overhead Expenses Interest Mach & building depreciation Miscellaneous Total overhead expenses Total dir & overhead expenses Net return Labor & management charge Net return over labor & mgt Cost of Production Per Cwt. Of Milk Total direct expense per unit Total dir& overhead expense per unit With other revenue adjustments With labor and management Est. labor hours per unit Other Information Number of cows Milk produced per cow 24,608 25,111 Total milk sold 7,987,148 4,812,440 Lb. of milk sold per FTE 1,280,903 1,795,595 Culling percentage Turnover rate Cow death loss percent Percent of barn capacity Feed cost per day Feed cost per cwt. of milk Feed cost per cow 2, , Hired labor per cow Avg. milk price per cwt Milk price / feed margin Ohio Farm Business Analysis Program Page 14

16 Livestock Enterprise Analysis 25 Conventional Herds Sorted By Net Return Dairy -- Average Per Cow Avg. Of All Farms High 20% Number of farms 25 5 Quantity Value Quantity Value Milk sold (cwt) 24, , , , Dairy Calves sold (head) Transferred out (head) Cull sales (head) Other income Purchased (head) Inventory change (head) Gross margin 5, , Direct Expenses Protein Vitamins Minerals (lb.) , , Corn (bu.) Corn Silage (lb.) 23, , Hay, Alfalfa (lb.) 2, , Rye Silage (lb.) 1, , Other feed stuffs (lb) 3, , Breeding fees Veterinary Supplies Contract production exp Fuel & oil Repairs Custom hire Hired labor Utilities Hauling and trucking Marketing Bedding Total direct expenses 4, , Return over direct expense , Overhead Expenses Farm insurance Interest Mach & building depreciation Miscellaneous Total overhead expenses Total dir & overhead expenses 4, , Net return Labor & management charge Net return over labor & mgt Cost of Production Per Cwt. Of Milk Total direct expense per unit Total dir& overhead expense per unit With other revenue adjustments With labor and management Est. labor hours per unit Other Information Number of cows Milk produced per cow 24,854 24,298 Total milk sold 8,449,275 6,973,133 Lb. of milk sold per FTE 1,291,846 1,400,027 Culling percentage Turnover rate Cow death loss percent Percent of barn capacity Feed cost per day Feed cost per cwt. of milk Feed cost per cow 2, , Hired labor per cow Avg. milk price per cwt Milk price / feed margin Ohio Farm Business Analysis Program Page 15

17 Dairy Per Cow; 2017 RankEm Benchmark Report, 25 Conventional Ohio Dairy Farms Group Median Count 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Milk sales 4, Gross Margin 4, Total feed expense 2, Breeding Fees Veterinary Livestock supplies Fuel & Oil Repairs Marketing Operating interest Total direct expenses 4, Return over direct expenses Hired labor Real estate taxes Farm insurance Utilities Interest on intermediate debt Interest on long term debt Machinery depreciation Building depreciation Total overhead expenses Total dir & overhead expense 4, Net return Net return over labor & mgt Cost of production Corn Fed (Bu.) Corn Silage Fed (Ton) Hay, Alfalfa Fed (Ton) Avg. number of head Milk produced per head 24, Culling percentage Turnover rate Percent of barn capacity Feed cost per cwt of milk Feed cost per head 2, Hired labor per cow Avg. milk price per cwt , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,821 19,487 20,154 20,819 22,914 24,273 26,557 26,860 30,090 31, , , , , , , , , , , , Refer to page 12 for information on how to use benchmark reports The Ohio State University Page 16

18 Livestock Enterprise Analysis Conventional Herds Sorted By Net Return Dairy -- Average Per Cwt. Of Milk Avg. Of All Farms High 20% Number of farms 25 5 Quantity Value Quantity Value Milk sold (cwt) Dairy Calves sold (head) Transferred out (head) Cull sales (head) Other income Purchased (head) Inventory change (head) Gross margin Direct Expenses Protein Vitamins Minerals (lb.) Corn (bu.) Corn Silage (lb.) Hay, Alfalfa (lb.) Rye Silage (lb.) Other feed stuffs (lb) Breeding fees Veterinary Supplies Contract production exp Fuel & oil Repairs Custom hire Hired labor Utilities Hauling and trucking Marketing Bedding Total direct expenses Return over direct expense Overhead Expenses Farm insurance Interest Mach & building depreciation Miscellaneous Total overhead expenses Total dir & overhead expenses Net return Labor & management charge Net return over labor & mgt Cost of Production Per Cwt. Of Milk Total direct expense per unit Total dir& overhead expense per unit With other revenue adjustments With labor and management Est. labor hours per unit Other Information Number of cows Milk produced per cow 24,854 24,298 Total milk sold 8,449,275 6,973,133 Lb. of milk sold per FTE 1,291,846 1,400,027 Culling percentage Turnover rate Cow death loss percent Percent of barn capacity Feed cost per day Feed cost per cwt. of milk Feed cost per cow 2, , Hired labor per cow Avg. milk price per cwt Milk price / feed margin Ohio Farm Business Analysis Program Page 17

19 Dairy Per Cwt. Of Milk; 2017 RankEm Benchmark Report, 25 Conventional Ohio Dairy Farms Group Median Count 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Milk sales Gross Margin Total feed expense Breeding Fees Veterinary Livestock supplies Fuel & Oil Repairs Marketing Operating interest Total direct expenses Return over direct expenses Hired labor Real estate taxes Farm insurance Utilities Interest on intermediate debt Interest on long term debt Machinery depreciation Building depreciation Total overhead expenses Total dir & overhead expense Net return Net return over labor & mgt Cost of production Corn Fed (Bu.) Corn Silage Fed (Ton) Hay, Alfalfa Fed (Ton) Avg. number of head Milk produced per head 24, Culling percentage Turnover rate Percent of barn capacity Feed cost per cwt of milk Feed cost per head 2, Hired labor per cow Avg. milk price per cwt ,821 19,487 20,154 20,819 22,914 24,273 26,557 26,860 30,090 31, , , , , , , , , , , , Refer to page 12 for information on how to use benchmark reports The Ohio State University Page 18

20 2017 Conventional Herds (Farms Sorted By Net Return) Dairy -- Average Per Cow Avg. Of All Farms Low 20% 20-40% 40-60% 60-80% High 20% Number of farms Quantity Value Quantity Value Quantity Value Quantity Value Quantity Value Quantity Value Milk sold (cwt) 24, , , , , , , , , , , , Dairy Calves sold (head) Transferred out (head) Cull sales (head) Other income Purchased (head) Inventory change (head) Gross margin 5, , , , , , Direct Expenses Protein Vitamins Minerals (lb.) , , , , , Corn (bu.) Corn Silage (lb.) 23, , , , , , Hay, Alfalfa (lb.) 2, , , , , , Hay, Grass (lb.) , , Other feed stuffs (lb) 4, , , , , , Breeding fees Veterinary BST Supplies Contract production exp Fuel & oil Repairs Custom hire Hired labor Utilities Hauling and trucking Marketing Bedding Total direct expenses 4, , , , , , Return over direct expense , Overhead Expenses Interest Mach & building depreciation Miscellaneous Total overhead expenses Total dir & overhead expenses 4, , , , , , Net return Labor & management charge Net return over labor & mgt Cost of Production Per Cwt. Of Milk Total direct expense per unit Total dir& overhead expense per unit With other revenue adjustments With labor and management Est. labor hours per unit Other Information Number of cows Milk produced per cow 24,854 26,914 23,947 26,116 23,264 24,298 Total milk sold 8,449,275 10,043,719 8,050,511 7,450,087 9,728,924 6,973,133 Lb. of milk sold per FTE 1,291,846 1,308,428 1,441,313 1,430,868 1,051,412 1,400,027 Culling percentage Turnover rate Cow death loss percent Percent of barn capacity Feed cost per day Feed cost per cwt. of milk Feed cost per cow 2, , , , , , Hired labor per cow Avg. milk price per cwt Milk price / feed margin Ohio Farm Business Analysis Program Page 19

21 2017 Conventional Herds (Farms Sorted By Net Return) Dairy -- Average Per Cwt. Of Milk Avg. Of All Farms Low 20% 20-40% 40-60% 60-80% High 20% Number of farms Quantity Value Quantity Value Quantity Value Quantity Value Quantity Value Quantity Value Milk sold (cwt) Dairy Calves sold (head) Transferred out (head) Cull sales (head) Other income Purchased (head) Inventory change (head) Gross margin Direct Expenses Protein Vitamins Minerals (lb.) Corn (bu.) Corn Silage (lb.) Hay, Alfalfa (lb.) Hay, Grass (lb.) Other feed stuffs (lb) Breeding fees Veterinary BST Supplies Contract production exp Fuel & oil Repairs Custom hire Hired labor Utilities Hauling and trucking Marketing Bedding Total direct expenses Return over direct expense Overhead Expenses Interest Mach & building depreciation Miscellaneous Total overhead expenses Total dir & overhead expenses Net return Labor & management charge Net return over labor & mgt Cost of Production Per Cwt. Of Milk Total direct expense per unit Total dir& overhead expense per unit With other revenue adjustments With labor and management Est. labor hours per unit Other Information Number of cows Milk produced per cow 24,854 26,914 23,947 26,116 23,264 24,298 Total milk sold 8,449,275 10,043,719 8,050,511 7,450,087 9,728,924 6,973,133 Lb. of milk sold per FTE 1,291,846 1,308,428 1,441,313 1,430,868 1,051,412 1,400,027 Culling percentage Turnover rate Cow death loss percent Percent of barn capacity Feed cost per day Feed cost per cwt. of milk Feed cost per cow 2,380.06, , , , , Hired labor per cow Avg. milk price per cwt Milk price / feed margin Ohio Farm Business Analysis Program Page 20

22 2017 Conventional Dairy Farms Farms Sorted By Enterprise Size Dairy -- Average Per Cow Avg. Of Ove All Farms Number of farms Quantity Value Quantity Value Quantity Value Quantity Value Milk sold (cwt) 24, , , , , , , , Dairy Calves sold (head) Transferred out (head) Cull sales (head) Other income Purchased (head) Inventory change (head) Gross margin 5, , , , Direct Expenses Protein Vitamins Minerals (lb.) , , , , Corn (bu.) Corn Silage (lb.) 23, , , , Hay, Alfalfa (lb.) 2, , , , Hay, Grass (lb.) Haylage, Alfalfa (lb.) Rye Silage (lb.) 1, , , Other feed stuffs (lb) 1, , , Breeding fees Veterinary Supplies Contract production exp Fuel & oil Repairs Hired labor Utilities Hauling and trucking Marketing Bedding Total direct expenses 4, , , , Return over direct expense Overhead Expenses Interest Mach & building depreciation Miscellaneous Total overhead expenses Total dir & overhead expenses 4, , , , Net return Labor & management charge Net return over labor & mgt Cost of Production Per Cwt. Of Milk Total direct expense per unit Total dir& overhead expense per unit With other revenue adjustments With labor and management Est. labor hours per unit Other Information Number of cows Milk produced per cow 24,854 22,284 24,341 25,907 Total milk sold 8,449,275 3,194,090 8,030,063 18,799,516 Lb. of milk sold per FTE 1,291,846 1,168,360 1,296,569 1,372,833 Culling percentage Turnover rate Cow death loss percent Percent of barn capacity Feed cost per day Feed cost per cwt. of milk Feed cost per cow 2, , , , Hired labor per cow Avg. milk price per cwt Milk price / feed margin Ohio Farm Business Analysis Program Page 21

23 2017 Conventional Dairy Farms Farms Sorted By Enterprise Size Dairy -- Average Per Cwt. Of Milk Avg. Of Over All Farms Number of farms Quantity Value Quantity Value Quantity Value Quantity Value Milk sold (cwt) Dairy Calves sold (head) Transferred out (head) Cull sales (head) Other income Purchased (head) Inventory change (head) Gross margin Direct Expenses Protein Vitamins Minerals (lb.) Corn (bu.) Corn Silage (lb.) Hay, Alfalfa (lb.) Hay, Grass (lb.) Haylage, Alfalfa (lb.) Rye Silage (lb.) Other feed stuffs (lb) Breeding fees Veterinary Supplies Contract production exp Fuel & oil Repairs Hired labor Utilities Hauling and trucking Marketing Bedding Total direct expenses Return over direct expense Overhead Expenses Interest Mach & building depreciation Miscellaneous Total overhead expenses Total dir & overhead expenses Net return Labor & management charge Net return over labor & mgt Cost of Production Per Cwt. Of Milk Total direct expense per unit Total dir& overhead expense per unit With other revenue adjustments With labor and management Est. labor hours per unit Other Information Number of cows Milk produced per cow 24,854 22,284 24,341 25,907 Total milk sold 8,449,275 3,194,090 8,030,063 18,799,516 Lb. of milk sold per FTE 1,291,846 1,168,360 1,296,569 1,372,833 Culling percentage Turnover rate Cow death loss percent Percent of barn capacity Feed cost per day Feed cost per cwt. of milk Feed cost per cow 2, , , , Hired labor per cow Avg. milk price per cwt Milk price / feed margin Ohio Farm Business Analysis Program Page 22