ABSTRACT
This research examines the definition, historical pattern,
and utility of the milk-to-feed price ratio (MF)
as a measure of dairy farm profitability. The MF was
generally an acceptable proxy of profitability in an annual
sense from 1985 to 2006. The MF was steady at an
average of 2.8 from 1985 to 2006 even as average annual
milk price in nominal terms increased from $12 to $14/
hundredweight. An alternative proxy for profitability
is income over feed costs, which is measured in dollars
per hundredweight. Comparison with an actual profit
measure, rate of return on assets, is used to examine
the appropriateness of the proxies. The volatility from
2007 to 2009 resulted in MF being a poor measure of
profitability over that period. The implication is that
MF is not the preferred measure of profitability when
a significant change in the pattern of one or both price
series occurs. Income over feed cost is a better measure
of profitability in periods of volatility.
Key words: cost of production , economics , income
over feed costs , profit
Performance of High Producing Dairy Cows
with Three Different Feeding Systems Combining
Pasture and Total Mixed Rations
ABSTRACTThis research examines the definition, historical pattern,and utility of the milk-to-feed price ratio (MF)as a measure of dairy farm profitability. The MF wasgenerally an acceptable proxy of profitability in an annualsense from 1985 to 2006. The MF was steady at anaverage of 2.8 from 1985 to 2006 even as average annualmilk price in nominal terms increased from $12 to $14/hundredweight. An alternative proxy for profitabilityis income over feed costs, which is measured in dollarsper hundredweight. Comparison with an actual profitmeasure, rate of return on assets, is used to examinethe appropriateness of the proxies. The volatility from2007 to 2009 resulted in MF being a poor measure ofprofitability over that period. The implication is thatMF is not the preferred measure of profitability whena significant change in the pattern of one or both priceseries occurs. Income over feed cost is a better measureof profitability in periods of volatility.Key words: cost of production , economics , incomeover feed costs , profit Performance of High Producing Dairy Cowswith Three Different Feeding Systems CombiningPasture and Total Mixed Rations
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