Revenues are a component of business management that are often overlooked because they are more difficult to control and understand. However, subtle differences in farm revenues often distinguish highly profitable dairies from those that are not. This means that dairies do not have control over the price of milk. This is certainly true given the recent BFP crash. However, more factors than just the price of milk affect the revenues of the dairy business.
Revenues represent the total amount of dollars generated from business activities.
Overall farm productivity plays an important role in determining how much is generated. The portion of total revenues the business holds on to is retained as profit. Therefore, anything a manager can do to increase revenues while controlling expenses improves business profitability. I n order to demonstrate the effect that farm productivity has on revenues and overall dairy profitability, some financial performance information was examined from the Dairy Business Analysis Project. Those dairies that provided complete and verifiable information were sorted on the basis of net farm income from operations per cwt.