Resources / Dairy / Cost of production
Dairy · Financial · Breakeven

Cost of production

52 ¢/L · breakeven

Total operating cost divided by the litres of milk produced — the cents-per-litre it costs to fill the vat, before the farmgate price is even considered. The cleanest measure of how lean the system runs.

Worked example · Cost per litre breakdown
52 ¢ / litre Feed 24¢ Labour 10¢ Herd & shed 9¢ Overheads 9¢
Cost per litre breakdown
The benchmark

Cost of production swings with feed prices; the Dairy Farm Monitor Project tracks it by region each year — feed is usually the largest slice.

Dairy Farm Monitor Project ↗
What it signals

Cost per litre is your breakeven and your buffer: the gap between it and the milk price is the margin that survives a downturn. Feed is usually the biggest and most controllable slice.

Data required to calculate
Total operating costs$Total litres producedL

Silo pulls each of these from the sources the operation already uses, and keeps the figure current automatically.

How to improve it
01

Grow and harvest more home-grown feed to dilute bought-in feed cost.

02

Lift litres and solids per cow and per hectare to spread fixed costs over more milk.

03

Benchmark and competitively quote major inputs — feed, fertiliser, finance.

Questions & answers

What is cost of production?

Total operating cost divided by the litres of milk produced — the cents-per-litre it costs to fill the vat, before the farmgate price is even considered. The cleanest measure of how lean the system runs.

What data do you need to calculate cost of production?

You need: Total operating costs ($), Total litres produced (L). Silo pulls each of these from the sources the operation already uses and keeps the figure current automatically.

What is a good cost of production benchmark?

Cost of production swings with feed prices; the Dairy Farm Monitor Project tracks it by region each year — feed is usually the largest slice.

How do you improve cost of production?

Grow and harvest more home-grown feed to dilute bought-in feed cost. Lift litres and solids per cow and per hectare to spread fixed costs over more milk. Benchmark and competitively quote major inputs — feed, fertiliser, finance.

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