Missouri Dairy Business Update
Volume 2, Number 6
June 2002

Most Missouri dairymen use unpaid family labor as the primary labor source on their farm. Because they don't write checks for all their farm's labor, many dairymen don't track their labor costs.

As herd sizes increase however, hired labor increasingly becomes an out of pocket cost. Dairymen today need to estimate labor costs on a per-cow and on a per-hundredweight-of-milk basis to compare themselves against others in the industry. They also need these labor costs estimates in future expansion planning.

The following table allows one to estimate total labor costs. Assuming a wage rate of $7.50 /hour, with an additional $1.00 /hour to cover the employers share of FICA and Medicare contributions, and other benefits, the table below depicts labor costs per cow and per hundredweight, during differing levels of production and staffing.

For example: In the example below, a dairyman with a 60 pound tank average, using one full time person per 50 cows will have a $340 per cow per year labor cost and a $1.86 labor cost per cwt. of milk produced.

Labor Benchmarks: When comparing labor costs against industry benchmarks check whether or not you and the benchmark are comparing apples to apples and oranges to oranges. Are you both including only the dairy labor or are you including both dairy labor and heifer raising labor. Typical western benchmarks exclude the labor costs of raising heifers.

The lowest labor cost dairies in western states typically have labor costs less than $1.00/cwt. In Missouri, labor costs of $1.50 to 1.75/cwt, including heifer-raising costs are a realistic goal. Minnesota's 2001 dairy labor benchmark on 100 to 200 head dairies farms had a total labor and management charge of $1.82/cwt. The 200 to 500 head farms had a total labor and management charge of $2.05/cwt.

In Kansas the 2001 dairy labor benchmark was $2.14 /cwt for paid and unpaid family labor costs, including raising heifers.