Costs of Producing Milk, 1975-84. Agricultural Economic Report Number 569.

Costs of producing milk rose 53 percent between 1975 and 1984 to $13.57 per hundredweight, whereas cash (out-of-pocket) costs rose 56 percent to $10.64 per hundredweight. Cash receipts, which measure gross production value, peaked in 1981 at $14.94 per hundredweight compared with $9.23 in 1975. Production costs in the Pacific region were more than $1 per hundredweight lower than costs in other regions every year during the period from 1975 to 1984. Appalachia and the Corn Belt had the highest costs. In 1983, the Economic Research Service revised its cost-of-production estimating procedures and cost-and-return budget formats to incorporate new concepts and methodologies. The old estimate format contained an estimate of variable costs and costs imputed to the operator-supplied inputs (including machinery, overhead, management, and land). The current format, on the other hand, contains the following three major categories of revised cost-and-return measures: cash receipts, cash costs (including variable and fixed expenses), and economic costs (which are the sum of farm overhead, taxes and insurance, capital replacement charges, and interest on loans). Cash receipts, variable and fixed cash expenses, and economic costs computed according to the old estimate format were then readjusted to make the old and new estimates consistent. (A total of 6 figures and 16 tables are included.) (MN)