Understanding the economics of dairy farming Part 1: Income, costs and profit

Dairy farms need to be profitable to survive, and good profitability has a large impact on animal health and welfare. Income is predominantly from milk sales, which have to cover variable and fixed costs before yielding a profit. The main variable costs are concentrate feeding (6 ppl) and forage costs (2.6 ppl) and the main fixed costs are labour (5 ppl), power and machinery (5 ppl) and herd depreciation (3.5 ppl). In combination these costs amount to 75% of the income. An improved understanding of how these figures interrelate will improve veterinary surgeons' ability to offer viable herd health advice.