Economics: An Argument for Raw Milk in NJ

American Farm :: State near bottom for U.S. sales of livestock
Read the full article:  American Farm :: State near bottom for U.S. sales of livestock.

By JOSEPH R. HECKMAN, Ph.D.File:DairyCattle.jpg
Special Thanks to The New Jersey Farmer

“Raw milk consumers want quality and strongly prefer milk from grass-fed cows with minimal grain feeding. New Jersey has favorable climatic and soil conditions for growing grasses that would support an economically viable pasture based raw milk dairies. Also, with the large population density of New Jersey within driving distance of farms, the Garden State is well positioned for direct on-farm sales of raw milk from small to modest sized dairy operations.

Two case studies described below serve to illustrate the economic viability for raw milk dairy farming.

In 2010, Joel McNair, editor of Graze Magazine described the potential economics of a small pasture-based raw milk dairy. He assumed that the dairy would be selling whole raw milk produced by just 20 cows directly to the consumer. He projects a production level of 20,000 gal of milk selling for $5 per gallon. This would result in an annual gross income of $100,000 (Alternatively, if the milk price is set at $7 per gallon, the annual gross income may be $140,000). This 20 cow dairy would require about 40 acres of good pasture land along with a simple barn, and a small milking facility kept exceptionally clean.

A second example is of an organic 43 cow dairy operation that in 2008 had a net farm income of about $22,000 from selling its organic raw milk to a processor for pasteurization. If one made the assumption that all of that raw milk would instead be sold directly to consumers at $6 per gallon, the net farm income may be raised to $340,000. This estimate is based on figures provided by an organic dairy farm in New England. The real economics of raw milk dairy farming probably lies somewhere between these models. Certainly a dairy farm selling to processors cannot automatically switch over to raw milk sales without changes and upgrades in production system. Also, milk production decreases as cows are transitioned from a high grain diet to predominately pasture and forage feeding. Furthermore, because raw milk sales rely on direct marketing, time and effort are required to develop a customer base. Raw milk consumers tend to be well educated and rather discriminating in terms of production system and food quality. The “Know Your Farmer, Know Your Food” philosophy very much applies to the raw milk market.”

Read the full article:  American Farm :: State near bottom for U.S. sales of livestock.