A Year on a Dairy Farm

6. Chapter 06 June The Milk Check

The milk check from Tom’s co-op arrives by direct deposit on the eighth of every month, for the milk that left the farm during the previous month. On the morning of June 8, 2025, Sarah is at the kitchen table with her laptop and a cup of coffee, and she is opening the bank’s website to look at it.

The check for May is $53,418.

She writes the number on a Post-it note, sticks it to the upper right corner of the laptop, and starts going through the deductions, line by line, on the co-op’s online portal. The portal shows her the breakdown. The farm shipped, in May, 138,712 pounds of milk. That is 1,387 hundredweight — cwt in the language of the industry, cee-double-yew-tee the way it is said. The price for that milk was $38.50 per hundredweight. Times 1,387, that comes to $53,400. Plus a quality bonus of $263 because the herd’s somatic cell count was below the threshold the co-op pays a premium for. Less hauling: $554. Less the federal dairy promotion order, which is the assessment that pays for the Got Milk? ads and other things you and Tom have very strong opinions about: $208. Less a few small administrative deductions.

Net: $53,418.

This is what the farm earned for thirty-one days of work by two adults, one teenager when she’s home, eighty-six dairy cows, and the soil of two hundred and ten acres in Schuyler County, New York.

It is more than most dairy farms in the country earned that month for the same effort.

It is not enough.

To understand why this is what dairy farmers get paid, you have to understand a system so old and so strange it would be hard to invent if you tried.

In the United States, since 1937, the price of milk has been set, in part, by the federal government. The system is called the Federal Milk Marketing Orders. There are eleven of them, each covering a region of the country. The Northeast Order covers New York and New England and parts of Pennsylvania and the mid-Atlantic. Tom’s milk is priced under it.

The way the orders work is this. The government does not set one price for milk. It sets four, based on what the milk is going to be used for. Class I is fluid milk — the gallon you drink. Class II is soft products: yogurt, cottage cheese, ice cream. Class III is cheese. Class IV is butter and milk powder. Class I gets the highest price. The other classes go down from there. The actual prices float month to month based on national market conditions; the formulas are public, and they would take a chapter of their own to explain, and have not made any farmer rich in seventy-five years.

Tom does not get to choose where his milk goes. His co-op pools the milk of all its members and sells it to processors all over the region. Some of it becomes drinking milk. Some of it becomes yogurt. Some of it becomes cheese. The farmer is paid a blend price — a weighted average across the classes — that reflects how the co-op’s milk got used during the month. There is a great deal of math involved, performed by accountants in offices Tom has never been to, and the price comes out the other end.

What the farmer cannot do, under any version of this system, is negotiate his own price. He can switch co-ops, but the prices are similar. He can find a niche buyer — a cheesemaker, a yogurt maker — but the volumes are small and they have prices too. The dairy farmer is, in the language of economics, a price-taker: he produces a commodity, and the market gives him what the market gives him, and that is the deal.

The blend price for conventional milk in the Northeast in May 2025 was about $22 per hundredweight. Tom is being paid almost twice that — $38.50 — because his milk is certified organic and certified grass-fed by the American Grassfed Association. His co-op pays a premium for it, which covers the extra cost of producing milk this way. Without that premium, his farm would not be solvent. With it, his farm is, just barely.

A small grass-based organic dairy farm in Upstate New York has, broadly, the following economics in 2025.

The farm grosses about $540,000 a year in milk income. That is the top-line number, and it sounds like a lot of money — most adults would think you were doing very well if your business grossed half a million a year. But this is gross.

Out of that $540,000, in a typical year, Tom and Sarah pay:

• About $60,000 in labor: Marcelino’s wages, his housing, payroll taxes, workers’ comp.

• About $60,000 in costs related to the cows: the vet, AI semen, mineral supplements, hoof trimming, the organic and grass-fed certification fees, sawdust, the small daily things that add up over a year and ninety-four animals.

• About $80,000 in equipment costs: the tractor, the skid steer, the milking system, the bulk tank, parts, fuel, depreciation on all of it.

• About $90,000 in property and operating expenses: taxes on the land and buildings, farm insurance, utilities (the vacuum pump and the milk cooler run twenty-four hours a day), supplies, accounting, family health insurance — which is one of the largest single line items because Tom and Sarah are self-employed, and self-employed Americans pay full freight for health coverage.

• About $50,000 in debt service on the loans they took out in 2014 to upgrade the milking parlor and in 2019 to buy the eighty-acre piece next door.

That comes to about $340,000.

What is left — about $200,000 — is what Tom and Sarah live on, pay taxes on, and reinvest into the farm.

Of that $200,000, in 2024, they paid about $50,000 in federal income tax, state income tax, and self-employment tax. They paid themselves about $80,000 in family living expenses — for two people working roughly a hundred and twenty hours a week between them, plus a daughter when she is home, plus the value of being able to live on the land and not pay rent. The remaining $70,000 went to reinvestment in the farm: a new water heater, a partial roof repair on the heifer barn, replacement of one of the milking inflations that had started failing, a small reserve toward the next thing that breaks, which something always does.

That is in a normal year.

In 2022, when the drought hit and they had to buy in baleage at twice the usual price, the family’s take-home was $34,000. They drew on savings to make the year work. In 2023, when one of the bulk tank refrigeration units failed and the repair was $14,000 they had not budgeted for, the family’s take-home was $51,000.

This is what Tom and Sarah work for. This is the answer to the question, what does a small organic dairy farm in the Finger Lakes earn?

If you go to a Whole Foods in suburban Boston or Westchester or Greenwich, and you walk to the dairy case, and you pick up a half-gallon of organic grass-fed milk — the kind of milk that came from a farm like Tom’s — you will pay somewhere between four and five dollars. If you buy a full gallon, somewhere between seven and nine. The exact number depends on the brand, the city, the year.

What you are paying for, and where the money goes, breaks down roughly like this. Numbers vary by product and region; treat them as the shape of it, not the precise figures.

For every nine dollars you spend on a gallon of organic grass-fed milk:

• About three dollars goes to the retailer for the cost of stocking, refrigerating, and selling it.

• About a dollar goes to the distributor who got the milk from the processor to the store.

• About two dollars and fifty cents goes to the processor who pasteurized the milk, packaged it in the carton, marketed the brand, and shipped it.

• About thirty cents goes to the truck that hauled the raw milk from the farm to the processor.

• About two dollars and twenty cents goes to the farmer who actually produced the milk.

Out of nine dollars, the farmer who got up at four-thirty in the morning every day for the entire month gets a little more than two dollars per gallon. Of that, after his expenses, he might keep thirty or forty cents.

This is not a moral judgment about Whole Foods, or about the processor, or about anyone in particular. The retail markup pays real costs. The processor’s costs are real. The trucking is real. Everyone in the chain is, mostly, doing what their part of the system is set up to do. It is just useful to know what the gallon represents. It represents about thirty-five seconds of Tom’s time, twelve hours of Hazel’s, and roughly two cents per acre per year of the soil Tom’s grandfather bought in 1947.

In 2003, there were a little over seventy thousand dairy farms in the United States. In 2023, there were about twenty-four thousand. In twenty years, two-thirds of the country’s dairy farms went out of business. The trend has not slowed.

The farms that closed were, almost without exception, small. The farms that grew were large. The number of cows in the country is roughly the same as it was in 2003, because the surviving farms got bigger to make up for the ones that left. There are now dairy farms in California and Idaho and Texas with five and ten and fifteen thousand cows. There are dairies in New Mexico that are larger than some New England states’ entire dairy industry. The American milk supply has not shrunk. It has consolidated.

Why? Costs go up. Milk prices fluctuate. Big farms have lower per-unit costs because they buy feed in bulk, run equipment more efficiently, and spread their fixed costs over more milk. Small farms cannot match these efficiencies. So in any given year, when prices drop or input costs spike, it is the small farms whose margins go to zero first. They sell. Their cows go to the auction. Their land gets bought by a neighbor or a developer. Their barns, in some cases, fall in over the course of a few winters.

The Hartleys have a neighbor, three farms over, named Jerry Schoonmaker. Jerry milked sixty cows on a hundred acres until 2018, when his knees gave out and his son did not want to come back from his job in Buffalo to take over, and he sold the cows at the Hosking auction in New Berlin in November of that year. The barn is still there. It is not in good shape. The land is rented to a corn-and-soy operation owned by an investor in Albany whom Jerry has met once. Jerry lives in the house. He waves to Tom on the road.

This is part of what organic grass-fed costs, and it is part of what it is worth, and it is also part of what it cannot stop.

By the time Sarah is done with the spreadsheet it is nine-thirty. The May 2025 numbers are entered. The trailing-twelve-months tab is updated. The cash flow projection for the next quarter is on the next sheet over. She closes the laptop.

Tom comes in from the barn for coffee. He sees the Post-it note on the corner of the laptop. He does not need to ask.

“How was last month?”

“It was last month.”

This is the same exchange they had in February, and in November of the year before, and in most months of the eleven years Sarah has been doing the books, because there are some answers that do not benefit from being more specific than they are.

Outside, in the lower pasture, Hazel is grazing.

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