U.S. dairy production is consolidating into fewer but larger farms.
This report uses data from several USDA surveys to detail that
consolidation and to analyze the financial drivers of
consolidation. Specifically, larger farms realize lower production
costs. Although small dairy farms realize higher revenue per
hundredweight of milk sold, the cost advantages of larger size
allow large farms to be profitable, on average, even while most
small farms are unable to earn enough to replace their capital.
Further survey evidence, as well as the financial data, suggest
that consolidation is likely to continue.
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