The Financial Impact of More Components per Cow

Cheese now utilizes over 50% of the U.S. milk produced. Cheese and other dairy items need only components, not milk volume.  Fluid milk continues to decrease in consumption.  Butterfat is at record high prices, and milk protein is at decent prices.  Are these prices just temporary?  What can a producer do to deliver milk that meets the current needs and provides adequate revenue?  This post will quantify the financial impact of changes in component pounds and prices over the last 23 years.  It appears that the increase in component prices and the increase in component levels are not a short term events.

The October 15 post showed the monthly component level changes over the last six years including the first 10 months of 2023.  Chart I below illustrates the annual butterfat percent from 2000 to 2022.  The increase in average butterfat levels is dramatic.  Today's cows are producing 10% more butterfat in their milk on the average.  That is the average, many are producing at much higher butterfat levels.

The increase in butterfat levels began in 2011 and has not stopped.

Chart I - Annual Butterfat Percent

The same is true of milk protein levels which are up 7% over this same time period as displayed in Chart II below.  Protein levels were increasing in the first 10 years of Chart II, and in 2011 began increasing at an accelerated rate.

Chart II - Annual Protein Percent 

Charts I and II are the averages for all Federal Order dairy cows. Every producer is paid for butterfat.  In seven of the Federal Orders the producers are also paid for the pounds of milk protein.  Many producers are maximizing revenue by using the proven tools to successfully increase butterfat, protein, and revenue. 

Further boosting revenue is the increase in milk per cow (Chart III).  Over the time span used in this post, milk per cow has increased by over 30%.  With that increase in milk comes higher quantities of components.

Chart III - U.S. Annual Milk Production per Cow

How has the value for these components changed over 23 years?  Chart IV displays the producer prices for butterfat and protein.  Comparing 2022 to 2000, butterfat prices have increased by 160% and protein prices have increased by 60%.

Chart IV - Average Annual Price of Butterfat and Milk Protein

If you put all these numbers together, how much does that increase revenue per cow? The impact is huge and certainly shows how producers can survive and grow.  Butterfat revenue per cow has increased from $948 USD to $3221 USD per cow annually.  That is a 240% increase per cow!  Milk protein revenue has increased from $856 to $2152 per cow, a 150% increase.

Milk protein prices did have a brief increase during the start of COVID.  It now appears to be declining and butterfat is inclining.

Chart V - Revenue per Cow for
Butterfat and Milk Protein 

Those paid on the Component system (the majority of producers) received the combined revenue for butterfat and milk protein making the revenue increase grow from $1804 to $5374 per cow, a 200% increase (Chart VI).

Chart VI - Combined Revenue per Cow for
Butterfat and Milk Protein 

The October 15 post  discussed the 2023 additional increases in component levels.  Milk per cow will also likely show increases in milk per cow in 2023.  Increasing pounds of components in milk is vital to producer survivability and financial success.  Many techniques like breeding, cross breeding, adding fats to diets, amino acid balancing, and other techniques can increase components.  Amino acid balancing brings higher levels of both butterfat and milk protein and increases milk volume.  As an additional benefit, it also improves animal health.