What dairies will be the most profitable in 2022? Learning from the ZISK report
Published on Tue, 12/21/2021 - 10:56am
What dairies will be the most profitable in 2022? Learning from the ZISK report.
Aidan J Connolly, President, AgriTech Capital
ZISK is the fastest growing App in the Dairy industry, now used by 2800 farms owning over 2.4 million cows. As a result, the data collected by Zisk represents a sample of a quarter of the US herds, and a snapshot of the situation in the US dairy market today. It can be downloaded for free and provides producers with profitability estimates for their farm, and projections of how those profits will change moving forward. The ease of use, and speed with which it calculates means that the average user visits the app 3.62 times per day, spending approximately 5.5 minutes working in the app daily.
ZISK has released a report projecting expected dairy farm profits 2022.
Some of the main regional findings:
1. The most profitable parts of the US in 2020 will be the Northwest and Northeast, but smaller farms in those regions won’t participate in this success. On average farms with less than 250 cows will make just $125 to $170 per cow in 2020, while those with more than 1000 or 5000 cows will earn about three to five times that level.
2. The least profitable region is expected to be the Southwest, and farms below 250 cows are expected to lose money in 2022. The Southeast is close behind. In both cases farms between 250 -1000 cows will make about half the income per cow of their neighbors with over 1000 or 5000 cows.
Detailed regional analysis, state by state:
3. ZISK users in the Midwest expect to be profitable, with even the smaller farms expected to make money, but in this case farms over 1000 and 5000 cows will make 7 – 8 times the profit of the smaller farms. The most profitable ZISK farms will be in Missouri.
4. The Southwest region is one of the contrasts, with Oklahoma projecting the best profits and California not far behind. Arizona users of ZISK aren’t feeling the same love, and New Mexico and Kansas producers are also forecasting profits much below the nations average.
5. Northeast producers have very different expectations for 2022, with some projecting substantial losses and others very profitable years. Since more users of the ZISK App are present in New York and Pennsylvania these naturally are more representative of what is expected in 2022, with average profit projecting per cow at $480 and $518 respectively.
6. The Southeast is not expecting a good year in 2022, except for Florida. In fact, milk producers in five states, Mississippi, Arkansas, Louisiana, Tennessee, and Alabama, are projecting losses or marginal profits per cow, with Georgia, North Carolina and South Carolina well below the nations average returns.
7. The Northwest is expecting a banner year, with Washington leading the way. Idaho, Colorado, and Utah also expect strong years, with just Oregon below the US average and Montana’s smaller herds perspectives aren’t so positive.
Overall, the ZISK report data shows that the nationwide move towards larger herd size is born out in terms of profitability.
ZISK’s data shows that farms with over 1000 cows will be considerably more profitable than those with less, and those with less than 250 cows project profits per cow that are five times lower than those with over 1000 cows. Surprisingly, even farms with 750-1000 cows expect to be substantially less profitable (25-30% lower) than the 1K+ club. That said, the report shows that for 2022 there will be little benefit to have 2500 cows, 5000 cows or more, with profits being actually slightly lower per cow on these farms. As every report shows larger size farms are the way of the future, and milk purchasers and processers are expecting the same, with those investing expecting economies of scale to be crucial, but for the moment the 1000 plus cow club is the one to be a part of.