“The cost of producing a hectolitre, 100 litres, of milk in 2018 was $79.82 - an increase of about 6% from 2017,” explains Pauline Van Biert, research analyst with Alberta Agriculture and Forestry (AF). “The reason for this increase was mainly due to the high cost of feed.”
She says that the price for dairy hay was at an unprecedented high due to availability, quality and a competitive marketplace.
“Farmers looked for other feed sources and subsequently pushed up the price of silage and greenfeed. Feeding one cow for a year was almost $3,400. Feed alone made up just over 40% of the total cost of production.”
“The dairy industry is not a stand-alone industry, but closely linked to crop and hay farmers and market values of feed. Dairy farmers grow about 67% of their own roughage - hay, silage - and only 14% of their grains - barley, wheat, oats. Good quality feed is necessary to maintain the health of the dairy cows and maintain productivity levels.”
Van Biert adds that other factors leading to the higher cost of production in 2018 were:
- An increase in the cost of electricity for farm use in Alberta.
- An added fee for interprovincial milk hauling.
- The cost of bedding. Sawdust bedding was hard to source, especially in the north region of the province.
The 2018 Dairy Cost Study also found:
- Family members increased their labour hours. Van Biert notes that the agriculture labour market is still tight, but there seems to be a trend of more family members staying at or returning to the farm.
- Herd size has increased and average milk production per cow reached an all-time high.
- Investment per cow remains stable. “Even though there is some uncertainty due to the world trade environment and the effect on the dairy industry,” she adds. “There is still investment in buildings and technology to maximize efficiencies both in hours of labour and cow health, comfort and productivity.”
- Return to equity - gross income less total production cost - decreased significantly, as costs increased and the price farmers received for their milk remained mostly unchanged.
“Demand for milk remained high throughout 2018 and remains positive,” says Van Biert. “Even though there are less producers in Alberta - 509 at the end of 2018 - the industry has been successful in supplying the demand for milk production.”
This publication is the result of dairy farmers participating in the Dairy Cost Study and providing farm information. Farmers receive a detailed analysis about their farm to use in making management decisions looking for efficiencies at the farm. The aggregated information of all participants is compiled, resulting in this Alberta benchmark that is used as a reference for farmers and for those interested in the dairy industry in Alberta.
For more information or a printed copy of the study, connect with Pauline Van Biert: