15. Economics of Grass
With no control over the price of milk, large scale dairy farmers can either control their costs more closely, or expand their operations, to increase net income. While expansion is feasible if there is access to additional capital and labor, it will only work if coupled with the management skills necessary to lower their unit cost of milk. Smaller scale dairy farmers not interested in expansion can either control costs more closely or shift to grazing. Grazing is feasible only if the operator is comfortable with increasing the level of management. Grazing is not a solution for operations that currently have management skill issues. Precision management of forages and feeding can economically benefit all dairy farmers [GIS-32].
Farm management decisions must be based on a good understanding of the costs and returns involved in milk production. The macroeconomic question of whether or not grass forage production is suitable for the Northeast is easily resolved. The Northeast USA is exceptionally well suited to the production of perennial grasses. It is the site-specific microeconomic questions and the decision-making processes involved that lead to profitability. Decisions involving issues like what crops to grow, level of fertilization, harvest management, off-farm feed purchases, and ration formulation will determine the financial success of the farm enterprise.
Grass cultivar trial at Chazy, NY. The extra seed cost for the latest cultivars has essentially no impact on the overall economic success of grass forage.