By Brandy Harrison
GUELPH — At the helms of multi-million-dollar operations, dairy farmers have plenty of cash tied up in the barns, cows, and quota. But they also owe big time to the bank, according to an annual financial checkup of Ontario dairy farms.
The Ontario dairy farm accounting project took a fine-tooth comb to the books at 65 dairy farms in 2014, revealing a net farm income of $146,907 for farms milking an average of 80 cows. It outstrips net earnings of $99,394 a decade earlier and there is more breathing room between revenue and expenses, which were neck-and-neck in 2006.
Farm assets were worth an average of $6 million at market value but the average dairy farm also owed close to $1.5 million in loans and credit in 2014.
A joint effort of the Canadian Dairy Commission and the Dairy Farmers of Ontario, started in 1976, the project surveys a small sample of the province’s 3,900 dairy farms. It draws financial data from a new cross-section of farms each year to represent typical farm situations and account for regional and technological differences.
While the reliability of the milk cheque keeps the dairy sector in the black, the 2014 report shows the top-end dairy farms are pulling away.
Ranked by cost of production, the most-efficient 15 farms in the study milked almost four times the cows compared to the 15 smallest farms — 138 versus 40 — in half the time, profiting from nearly 2,300 more litres of milk per cow. The high-producing herds kept farmers labouring in the barn and field for an average of about 60 hours, while the smallest farms worked double time, logging about 144 hours per cow but shelling out less than half of what larger farms spent on hired labour.
Here’s a breakdown of the three groups by the numbers:
• The top 15 farms raked in an average net income of $334,462. Borrowing on a $9.55 million market value for farm assets, the farms had debts of $3.1 million.
• The middle 35 farms earned an average net income of $115,902 and had farm assets worth $5.94 million at market value, carrying $1.16 million in debt.
• The bottom 15 farms recorded a net income of only $31,683 on average but still had $2.64 million in farm assets at market value. Debt was a more modest $624,529.