Dairy farmers across the United States saw some relief in 2024 as milk prices increased and input costs stabilized, improving overall margins in most states compared to 2023. USDA data from the Agricultural Resource Management Survey reveals key shifts in milk production costs and returns per hundredweight sold.
National Overview
In 2024, the U.S. average gross value of production rose to $25.02/cwt, up from $22.51/cwt in 2023, primarily driven by higher milk prices ($22.44 vs. $20.24) and modest gains in cattle sales. While feed and labor costs remained high, the total cost per hundredweight decreased to $23.60 in 2024 from $26.74 in 2023. This led to a positive net return of $1.42/cwt, a significant turnaround from a loss of $4.23/cwt the previous year.
State-Level Highlights
California
California producers saw strong improvement in 2024 with a net return of $5.42/cwt, compared to a marginal loss of $0.11/cwt in 2023. While feed costs remained high, reductions in overhead helped boost profitability. California also had the highest average output per cow at 24,768 pounds.
Indiana
Indiana was the least profitable state in both years. In 2024, it posted a net loss of $4.60/cwt, a modest improvement over 2023’s loss of $10.62/cwt. High unpaid labor and capital costs continued to drag on margins.
Iowa and Kentucky
Iowa and Kentucky both posted positive returns in 2024 ($1.40 and $1.13/cwt respectively), compared to losses in 2023. These states benefitted from moderate feed costs and relatively lower overhead, especially in hired labor.
Michigan
Michigan remained one of the most costly states, with total costs reaching $32.60/cwt in 2024. With revenues failing to keep pace, it posted a loss of $7.28/cwt, though this was still an improvement over 2023’s $13.82/cwt loss.
New York
Despite its high milk value at $24.16/cwt, New York remained in negative territory with a $1.46/cwt loss in 2024. Overhead, particularly equipment and unpaid labor, continued to erode margins.
Pennsylvania
Pennsylvania had one of the highest overhead burdens, leading to consistent losses: $7.06/cwt in 2024 and $12.48/cwt in 2023. High costs in feed, repairs, and labor contributed to these deficits.
Wisconsin
Wisconsin producers neared breakeven in 2024 with a slight loss of $0.04/cwt, improving from a $5.43/cwt loss in 2023. The state maintained one of the higher outputs per cow at 24,902 pounds.
Cost Breakdown Insights
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Feed Costs: Averaged over 40% of total operating costs nationally. States like Michigan and Indiana faced notably high feed bills in both years.
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Labor Costs: Unpaid labor remained a major expense in states like Indiana and Kentucky, while California benefited from lower opportunity costs of unpaid labor.
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Capital Recovery: High in Kentucky, Pennsylvania, and New York, where infrastructure investment and equipment wear continue to add pressure.
Conclusion
While 2024 showed a notable improvement over 2023 in dairy production margins across much of the U.S., the financial picture remains mixed. Regions with high labor or capital recovery expenses continue to struggle. Moving forward, controlling overhead and optimizing feed efficiency remain key to maintaining profitability in an increasingly volatile market.
