Industry Analysis & Industry Trends
Dairy farmers' most important success factor is the price they receive for raw milk. Over the five years to 2017, the price of raw milk has been highly volatile, causing revenue for the Dairy Farms industry to fluctuate. Meanwhile, the price of feed, which typically makes up about half of the average dairy farm's total expenses, has been falling since 2014, significantly strengthening industry profit margins. However, the price of feed had increased leading up to 2014, causing many farms to either reduce their employment or exit the market. However, loses were contained by federal subsidies, which, according to agricultural policy, have sought to reimburse dairy farmers once raw milk prices fall below a certain threshold... purchase to read more
Industry Report - Industry Key Buyers Chapter
Low market share concentration characterizes the Dairy Farms industry. US dairy farms are highly fragmented, with most farms consisting of family owned operations. As a result, the industry is made up of many small farms that produce a minority of revenue. Industry concentration is increasing as small dairy farms take losses and leave the industry. Meanwhile, the remaining dairy farmers are growing operations to take advantage of economies of scale and increase their profitability.
Vertically integrated dairy cooperatives operate downstream from dairy farms to process, market and wholesale dairy products. The cooperatives allow dairy farmers to pool milk production, and the aggregate supply of milk can then be leveraged to assist in raising prices. Dai.. purchase to read more