I heard walmart has their own farms? Is that why they are 1.40 a gallon vs the small local grocery at 2.75 or 3.00? Same with eggs. Wally world is about 50 cents and local is 2 bucks.

Large grocery marts and convenience stores many times sell milk as loss leaders to bring in customers to buy the higher profit items. Most retail groceries operate on 2-5% margins and most times dairy is sold as a loss, which is why it is always in the back so customers go through the aisles to buy the high profit packaged items.
You can drink a gallon a milk a day but that does not impact that fluid milk sales have dropped every year for over 40 decades. Manufacturing of dairy products is where the profit is and also the jobs in the industry.

As to dairy farms being the way they are today in the USA. We want to buy $1.90 per gallon milk it is not going to be produced by a family milking 60-70 cows that need to buy health insurance, live, save for children costs and for retirement etc. We have actually added cost to the total production system and the response by good herd managers is to produce very high levels of milk production per cow, milk a lot of cows with less labor and invest in capital that will help them with cash flow issues. That has made the modern dairy farmer a manager of money and people instead of cows and land and that increases investment per cow and debt to finance those investments. People who are not good at managing money or people can not be successful long term when dealing in an industry that is demanding those skill sets.

Why have the very huge wealthy companies not in agriculture been reluctant to buy out huge dairies to control the market? It is because they know that it is fluctuating, fickle market with very, very narrow supply demand risks and inherently a very low return and thus they choose not to invest in areas where real money can be lost instead of just book money. Many wealthy businesses and individuals are investors in farms for tax loss purposes but a certain return and very good tax treatment on losses. That will soon be gone with a 21% tax instead of 35%. Not nearly the need to invest in losses when your reward for doing so has dropped by 50%.

Bryce

Alot of little guys get replaced when a farm has 30,000 cows milking on it. And were do they find the cheap labor to run a farm with 30,000 cows milking? South of the border of course.

That ceased in Feb. From what I understand they have lost their market.

Originally Posted By: Kirk De
Quote:
Alot of little guys get replaced when a farm has 30,000 cows milking on it. And were do they find the cheap labor to run a farm with 30,000 cows milking? South of the border of course.


That ceased in Feb. From what I understand they have lost their market.


Naw all sorts of immigrants still doing farm labor legal and illegal. To protect the farms they hire sub contractors now so Mr Reds dairy hires Elmexicano milkers and cattle care, Elmexicano supplies the labor and Mr Red writes the owner of Elmexicano a check every month and Elmexicano hires the labor without covering them with work comp or paying taxes on them. If the GOVT comes down on Mr Red he just points to Elmexicano and if they GOVT comes down on Elmexicano they have no assets other than a old junk van typically. Mr Red gets rich and grows and the little guys get pushed out.