Milk Income over Feed Cost Margin, Margin Protection Program, and Farm Finances for a Sample of Wisconsin Dairies in 2000-2017JEL codes

The relationship between farm-level milk income over feed cost (IOFC) margin and national margin, profit risk, and terminal stress risk are investigated using data on Wisconsin dairy farms over the period 2000-2017. Results show that farm-specific IOFC margins were not highly correlated with the national margin, higher farm IOFC margin increased profit level and volatility but decreased downside risk, and farm terminal stress appears unaffected by either the margin or the related payments. These findings suggest that, for sample farms, a policy that targets IOFC margin might reduce downside risk of net farm income.

Automated summary

The study found that farm-specific milk income over feed cost margin is not highly correlated with the national margin in Wisconsin dairy farms. Higher farm IOFC margin increased profit level and volatility but decreased downside risk, while farm terminal stress seems unaffected by the margin or related payments.