Monday, August 5, 2013

Raw Milk Monday. The cost of Bizness

Move 'em on, Head 'em up...Rawhide
You won't like this post. At the end we will most likely be increasing our milk prices. Such a spoiler I am. That's the problem with taking time to review your costs and your income and realizing that the bottom line is not so hot.

Way back in January (was it really so long ago?) I talked about this and planned to share more on the real costs of producing real milk. But as usual we got so busy with the farm we didn't take enough time to evaluate how the farm was doing.

But now we have. These results will hopefully help you who buy from us, understand how we come up with our price for raw milk from Certified Organic 100% grass fed cows as well as those of you who milk a few cows and sell the results as we do.

It's extremely difficult to find any other sources to help with these calcualtions since big universities are convinced, or at least want to convince US, that raw milk is unsafe and therefore they cannot promote raw milk sales. In addition, you know how some farmers are about sharing finances, harder than castrating a year old boar I would say.

So here goes. In a simplified form. For those of you who care.

Total raw Milk sales in 2012 were $25446. This included the value of what our own family consumed

Feed Costs for our Dairy of 12-15 cows totaled $11,740. That was a big hunk out of the income wasn't it? We included hay, minerals, salts and pasture rent.

Other direct costs totaled $ 14535 and included items such as housing, electricity, fencing, feeders, labor (not ours, just hired labor from time to time) milk tests, health items, and breeding costs (semen ain't FREE you know)

Indirect costs totaled $13,114 and included everything else like auto fuel, diesel, equipment repair, insurance, propane, phones, internet, education, marketing, memberships, pest control team (dogs and cats) chore clothes etc etc... All of these items were divided between our house, our dairy, our beef business and pork business.

So the final figures look like this
     raw Milk Income     $25446
     Raw Milk Expenses $27649
Bottom line                  - $2203

Hmmmm? The writing seems to be on the wall doesn't it? Keep in is the raw milk that brings folks to the farm for our other products, calves produced and added to our beef herd are not accounted for (yet). These figures are for 2012, This year 2013 is looking better since we did increase our prices from $5 a gallon to $6 a gallon and managed to grow more of our own hay. Of course we had expenses related to our struggle with IDPH...oh well, it's always something isn't it Gilda?

Next week I'll show you how the increase in our milk sales volumes and price helped our bottom line. At least that is what I HOPE to be able to show you.


  1. Frightening figures, but, presumably, as milk is a by-product of calf production, I imagine that a dozen calves must generate some income to offset the loss on milk?

  2. What? You don't make six dollars on every six dollars of milk you sell? Admittedly, I do not sell more than say six or seven gallons a week so I'm like a mini-micro-teeny-tiny version of a "real" milk seller. But I swear there are still people who think, and even SAY, that we must be making a killing on milk (I sell mine for $6-7 a gallon) because we don't have the big infrastructure like the larger farms have. I just like go outside and get free milk from my goats. Because they just go out and eat free weeds. And they're just pets anyhow.

    I hope your accounting numbers enlighten some people about how little you actually make from milk.

  3. Oh, these crazy farmers and their high costs...I mean, don't you just *SNAP* your fingers and milk magically appears in containers?? And don't you just do this because you love cows and stand there scratching their fannies all day??

    I love this post and love that you and Keith are REAL farmers, putting in way-too-much work to get us the real food Donna. I wish people would learn that food is as valuable as designer clothes. I mean, this stuff goes INSIDE your body, would you want to spend as much money for THAT??

    Hugs. You know if I was there, I'd spend the money on the milk (and I STILL wish there was a way to ship it here!)

  4. Cro. Yes indeed. Several calves born to provide more milk and raise for beef. Also large amounts of milk fed us. And the cows manure provides free fertilizer and their milk also feeds pigs. So yes wise man, "profit" has far more to do with other gifts that just the dollars (or euros!)

  5. Carolyn, Any farmer who takes care of animals year round is "real" and fortunately when folks come to get the milk they also buy the beef and pork which offers a bit more profit for us. We would not still be in existence if we were not diversified.

  6. Zan, for a New Yorker you sure do have a great grasp on the farm life...because your heart is a farmers heart that's why! Love all your recent travel posts you Gypsy you!!!!!

  7. Good to do these assessments though. Apparently there's lots of beef and dairy farmers here who lose money on sheep (have 100 sheep in addition to cattle/cows) and don't realise it

  8. So glad you are willing to educate folks about the real costs of farming....keep it up! Our closest raw milk source is $6 a gallon (Upstate NY) and worth every penny!

  9. I love that you are putting it all out there! Thanks for sharing :)