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Economies of scale different between dairy and crops

An agricultural economics expert says most dairy farms are continuing to get bigger.  “There’s a real continuing pressure to get larger for a number of different reasons and they’re all really related to economies of size in one way or another.”

Carl Zulauf from Ohio State tells Brownfield producers continue to see much lower production costs when they operate on a larger scale.

Zulauf says producers with larger herds usually spend a lot less money to make milk.  “For example, herds with less than 50 cows have about 48-dollars a hundredweight to produce milk, the total cost, compared to herds of over 1,000 cows was about 19-dollars in total costs.”

And, he says with numbers like that, it’s no surprise many dairy producers are thinking bigger is better.

Zulauf recently studied the economies of scale for producing milk compared to crops and tells Brownfield the differences between large and small farms might be discussed during farm bill planning.

He tells Brownfield production costs for crops tend to level off above 250 acres, where dairy doesn’t level off much at all.

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