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A Profitability Analysis of Dairy Feeding Systems in the Northeast

By Jonathan R. Winsten, Robert L. Parsons and Gregory D. Hanson

Abstract

This study analyzes the use and profitability of three distinct feeding systems; confinement feeding, traditional grazing, and management-intensive grazing from a randomly selected sample of northeastern dairy farms. The confinement feeding farms were significantly larger and produced more milk per cow, while the farms using management-intensive grazing incurred the lowest production costs. Both confinement feeding and management-intensive grazing generated significantly higher rates of return to farm assets relative to farms using a mixed system. Multiple regression analysis confirms the critical importance of herd size, milk production per cow, debt level and veterinary expenses to farm profitability in all production systems. The viability of different feeding systems used by dairy farmers; particularly the relative performance of management-intensive grazing in the Northeast-ern U.S.A., is a topic of increasing interest in the popular and scientific literature. The objectives of this study are two-fold. The first istoprovide de-scriptive characteristics of dairy farms using three distinctive feeding systems. The second is to mea-sure the profitability resulting from the three feed-ing systems and to determine which variables ex-plain differences in profitability. The analysis is based on data obtained from a stratified random sample of dairy farms from Pennsylvania and Ver-mont. Pennsylvania is the nation’s fourth largest producer of milk with dairy farm income repre-senting slightly more than 509Z0of the state’s agri-cultural revenues. Vermont is the nation’s four-teenth largest milk producer and is the state most heavily dependent on dairy which accounts for 74 % of agricultural revenues (USDA National Ag-ricultural Statistics Service). During the 1950 to 1990 period, the average number of cows on Pennsylvania dairy farms in-creased from 9 to 50 (Pennsylvania Agricultural Statistics Service); on Vermont dairy farms the av-erage herd size increased from 26 to 69 cows (Ver

Year: 2014
OAI identifier: oai:CiteSeerX.psu:10.1.1.501.1379
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