Raw Milk, in 2013 the real cost of real good.

The raw milk farmer...in warmer times.

Yesterday we had some very unusual visitors, raw milk farmers like ourselves. But because they work very hard to stay under the same radar I am always swinging from dressed like a clown grabbing as much attention as I can, I will not share their names or their location.

They do things very differently from us. Instead of selling raw milk outright, by the gallon, to any customer who comes up their farm lane, they do this. They require a signed agreement called a "Milk Share Agreement". This allows the owner of the share, a certain predetermined amount of milk. Often, one share will equal one gallon of milk a week. Two shares will get you two gallons and so on.

This farmers customers must come recommended by another current customer and this farmer does no advertising of his raw milk AT ALL. Even when talking about it...he lowers his voice.

How angry this makes me.

A hard working farmer feels he has to sneak about in order to sell his perfectly good farm product which in turn puts food on his own families table, or be arrested for I don't know what. As I've mentioned many times before, in Illinois it is LEGAL to sell raw milk as long as the consumer comes to your farm with his own container. There is no requirement for signed agreements or the purchase of cow shares but this farmer is cautious due to fear.

In the meantime, I continue to blog about our raw milk sales and specifically this month, the cost of producing raw milk. So, how does one compute the cost of one gallon of raw milk? Here is our formula. Please keep in mind, this is a very GENERAL blog about computing costs. The process is long and time consuming but since the big universities focus on the cost of producing conventional milk, you wpn't find much help anywhere else. This blog is intended to at least get you started.

To compute your cost for producing one gallon of milk you must first know your  direct and indirect costs.

Direct costs usually include ,Hay, pasture rent, mineral supplements, water, fencing, bedding, vet care, health care (not the same as vet care), housing, milking equipment such as milk filters and milk room, milk parlor cleaning supplies, milk parlor maintenance

Indirect costs usually include everything else but to narrow it, we track these costs; utilities (gas, electric, phone) marketing, building maintenance, organic certification fees, truck fuel and maintenance, natural gas to heat the shop, tractor repair, hired labor, chore clothes, tank room maintenance,  education, magazine subscriptions , etc.

Because we have several enterprises here such as pork production and beef production we add up all our expenses and then allocate a certain percentage to each of our cost centers. For example, electricity...we add the total amount paid this past year and  then allocate 30% of that to our house, 10% to hogs. 20% to beef and 40% to dairy. We do this for each and every expense we have., but the percentage of allocation for each expense area is not allows the same.

It takes a long time.

After all expenses are added for direct costs we will divide that by the total number of gallons of milk produced for the last year thus giving us the direct cost of producing one gallon of certified organic milk.

We'll do the same for indirect costs and then add indirect and direct cost together for the combined cost of producing a gallon of milk. In my last post in this series, I'll pull it all together and talk about how we plan to lower our costs of producing certified organic milk and by how much.

In the meantime if you have a similar enterprise and have more to add please do so. You can leave comments on this blog, email me at opies99@gmail.com, call me at 1-815-635-3414 or cover your face with a mask and drop me a sealed note under my door.

You won't be the first