Florida and Georgia are two of the smaller states in terms of milk production, but they are well paid, as most of their milk is Class I which carries a high value (Table I). This post is intended as an example of how revenue can be increased by following the successful processes of other locations.
Compared to Wisconsin, Florida and Georgia each produce only about 7% of the milk that Wisconsin does. Levels of butterfat are 8% and 6% lower for Florida and Georgia than Wisconsin (Table II). Milk per cow is 25% and 18% lower for Florida and Georgia. This does make the states of Florida and Georgia targets for professional advice to increase revenue.
Florida and Georgia are paid by the “Advanced” formulas and Wisconsin is paid by the “Class and Component” formulas. Both payment systems pay for butterfat at nearly the same average price although the calculations are based on different time frames. See this prior post to compare component levels between Federal Orders.
REVENUE IF FLORIDA AND GEORGIA HAD THE BUTTERFAT COMPONENT LEVELS OF WISCONSIN
What does this mean in revenue. For Florida, increasing the component level of butterfat from 3.96% to 4.32% would increase revenue by one dollar per cwt. For Georgia the increase from 4.05% butterfat to 4.32% would increase revenue per cwt. by about $.75 per cwt. (Table II). The demand for butterfat is strong and current high prices will remain. Increasing butterfat levels would increase producer revenue in Florida by about $20 million annually. Georgia, revenue could increase by $15 million dollars.
ADDITIONAL REVENUE IF FLORIDA AND GEORGIA HAD THE SAME MILK PER COW AS WISCONSIN
Getting more milk per cow can reduce cost by getting the volume of milk needed with fewer cows to handle. Florida always has the lowest milk per cow of any state and is 19% lower than Wisconsin. Georgia has an 11% lower milk per cow than Wisconsin (Table III).
The financial impact of increasing milk per cow is more difficult to specify. Fixed costs for operating a farm can be decreased in both long-term investments and ongoing feed and other costs. Feed efficiency can reduce costs by $.60 per cow per day. If more milk per cow means larger but fewer herds that can also reduce costs.
The milk per cow difference between Florida or Georgia and Wisconsin is huge (Table III).
SUMMARY
How could this be implemented? There are many experienced professionals that concentrate on areas like the Upper Midwest. What they have learned in Wisconsin can be applied to improve component levels and milk per cow in Florida and Georgia. The changes in Wisconsin have taken time and certainly implementing these techniques in Florida and Georgia will take time. However, the changes to modern dairy practices are known and will be financially beneficial.
Are Florida and Georgia producers satisfied with their high Uniform price? The opportunity to increase revenue when it is possible is the basis of capitalization.
