Optimizing overhead for dairy profitability
- ZISK
- 1 hour ago
- 1 min read
The cost of producing milk fell in 2025, but not across the board. Operating costs lowered while overhead rose, which tends to disadvantage smaller farms. Managing overhead may be the best strategy, on the cost side, to improve a farm’s profitability.
Operating costs versus overhead
Milk cost-of-production estimates for 2025 were recently released by the USDA Economic Research Service. The numbers represent averages and extrapolations based on a survey completed in 2021, but the trends within those averages reveal telling divergences among the cost structures of different-size operations.
The distinction between operating costs and overhead is important. Their differing trends have been developing for several years. How a farm handles these costs, through either operating efficiency or the ability to spread overhead efficiently across a herd, can explain why farms experience varying degrees of profitability.
Ben Laine
May 25, 2026
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