How Do Dairy Farmers Get Paid?
When you’ve driven past your local dairy farm or had a glass of milk, you may have wondered how exactly dairy farmers make money.
Well, we’re here to answer that exact question! Here is the process from cow to cash:
Farm to Processing Plant
The process begins when dairy farmers deliver their milk to a local dairy processing plant, which sorts the milk based on its fat content and pasteurizes it. The milk is bottled and shipped to retailers for sale in stores and restaurants.
The Farmer Receives a Set Amount of Money for Each Gallon Delivered.
The farmer receives a set amount of money for each gallon delivered to the processing plant. This price depends on the fat content and other quality factors of the milk, as well as how much is produced in total.
Bonuses
Dairies pay bonuses for meeting quality standards (such as having low bacteria counts) and production goals (like producing enough milk to meet demand).
Sometimes, though, dairies will pay bonuses for meeting quality standards for things such as total solids or protein content. These bonuses are often set by the dairy processor and can be paid either as a flat amount per hundredweight (hundred pounds) of milk or as a percentage of the base price.
In addition to this basic payment structure, some farmers also get other types of payments from their dairies that aren't part of their basic income but still help them cover their expenses and make ends meet. These include:
Farm Improvement Payments (FIPs). FIPs are provided by USDA's Farm Service Agency (FSA) through its Agricultural Risk Coverage program; they're used to help farmers recover some costs related to increasing production efficiency or improving environmental stewardship on their farms.
Dairies Pay Farmers According to the Quality of the Feed They Provide.
The better the quality of feed, the higher the payment will be. Feed is a major cost for dairy farmers; it's made up of crops such as corn, soybeans and alfalfa and can cost more than $100 per ton (about 2200 pounds).
To ensure that cows are eating their fill and getting enough nutrients from their food sources, dairy farmers need to make sure they're giving them just what they need so as not to waste any money on low-quality foods.
Dairy Farmers Get Paid for Their Milk in a Variety of Ways.
The most important thing to remember is that the amount they receive and how they're paid depends on a number of factors: the quality of their milk, how many cows they have and whether or not they meet certain quality standards set by their company.
