Labor cost per cow and per cwt

Definition

Labor cost per cow and labor cost per cwt express what a dairy spends on its workforce relative to the size of the herd and the milk it ships. Labor is the second-largest cost line after feed on most US dairies.

Labor cost (labor $) for a period is:

• gross wages: hourly, salary, piece-rate, overtime premium and bonuses earned in the period, plus
• employer payroll taxes: employer FICA (Social Security and Medicare), FUTA, state unemployment and workers’ compensation premiums, plus
• benefits, if the herd includes them: health insurance, housing, meals, retirement contributions, paid time off.

State the basis every time you report the number, for example “wages + employer taxes, excluding benefits and housing”. Benefits and employer-provided housing can be a large share of total labor cost on some dairies, so two herds can differ by a lot on basis alone.

Decide also whether the number covers:

• hired labor only, or hired labor plus an opportunity charge for unpaid owner and family labor (cost-of-production studies usually show both);
• dairy labor only (milking, cows, calves, heifers, feeding), or also crop, trucking and shop labor. Allocate shared employees by hours, not head count.

Per-cow and per-cwt figures answer different questions. $/cow/day measures the labor intensity of the herd. $/cwt measures labor cost against output, so it moves with production per cow as well as with payroll.

Cows per FTE

Cows per full-time equivalent (FTE) is a labor-efficiency measure that ignores wage levels:

• FTE = total hours paid in the period ÷ standard full-time hours for the period. Pick and state the standard; dairies often use a longer week than 40 hours (e.g. 50–60 h), which changes the result a lot.
• Cows per FTE = average cows ÷ FTE.

Include or exclude managers and owners consistently. A herd that counts only milkers and pushers will look far more efficient than one that counts everyone on the payroll.

Formula

Plain text:

Labor $        = gross wages + employer payroll taxes (+ benefits, if on that basis)

$/cow/day      = Labor $ / (average total cows × days in period)

$/cwt          = Labor $ / (lb milk shipped / 100)
$/cwt ECM      = Labor $ / (lb ECM shipped / 100)

FTE            = total hours paid / standard full-time hours for the period
Cows per FTE   = average total cows / FTE

LaTeX:

L = W_{\text{gross}} + T_{\text{employer}} \; (+\, B)
\qquad
\$/\text{cow/day} = \frac{L}{\bar{N}_{\text{cows}} \times d}
\qquad
\$/\text{cwt} = \frac{L}{M_{\text{lb}} / 100}
\qquad
\text{Cows/FTE} = \frac{\bar{N}_{\text{cows}}}{H_{\text{paid}} / H_{\text{FTE}}}

• Which cow count: the default is average total cows (milking + dry) over the period, i.e. cow-days ÷ days. Using milking cows only raises $/cow/day by roughly the dry-cow share. Heifers and calves are not in the denominator even though their labor is in the numerator; if the herd raises its own heifers, say so, or report heifer labor separately. See cow count definitions.
• Which milk: milk shipped (sold, from the milk check or plant receipts), not milk produced. Use ECM when comparing herds or breeds with different components.
• Period: match the payroll period to the milk and cow-count period. Use hours and wages earned in the month (accrual), not checks issued in the month, or a month with three biweekly paydays will look expensive.

How to pull it in DC305

Payroll data does not live in DC305. Wages, hours and employer taxes come from the payroll or timekeeping system and the general ledger. DC305 supplies the cow counts for the denominator; milk shipped comes from the milk check.

Cow counts from DC305:

COUNT ID FOR LACT>0                  total cows today (milking + dry)
COUNT ID FOR LACT>0 RC<>6            milking cows today (excludes dry, RC 6)

RC 6 is dry (see RC codes); <> means “not equal”.

Unverified

Whether the herd enters a dry-off event for every dry cow, so that all dry cows are RC 6.

A single snapshot is not an average. For a monthly figure, either average the daily or weekly counts the herd records, or use cow-days from a herd-summary report if the herd’s DC305 setup produces one. Check that sold and dead cows are counted for the days they were present.

DC305’s past inventory summary (ECON\ID, e.g. ECON\ID750 for the past 750 days) and the monthly MONITOR herd statistics are the built-in sources to try.

Unverified

Whether ECON\ID or MONITOR gives average cows or cow-days for a chosen date range on the version in use.

Typical range

Herd context: US Holsteins, freestall or dry-lot, 500+ cows, hired labor; labor $ = wages + employer taxes + benefits.

Measure	Typical	Notes
Labor $/cwt shipped	$2.00–$4.00	Cornell DFBS 2023, 118 NY farms (avg 1,296 cows): hired labor $3.39/cwt; top 25% by ROA $3.06. Lower on large dry-lot herds; higher on small herds
Labor $/cow/day	$1.50–$3.00	DFBS 2023 hired labor ≈ $2.55/cow/day ($3.39 × 27,487 lb sold per cow ÷ 100 ÷ 365). Rises with wage rates and benefits
Cows per FTE (50–60 h FTE), large herds	50–100	DFBS 2023: 53.9 cows per worker equivalent (top 25%: 60.0). Large dry-lot herds and rotary parlors at the top
Cows per FTE, small tiestall or freestall	25–45	Owner and family labor often uncounted

DFBS figures are from Cornell E.B. 2024-07 (2023 data). DFBS farms are self-selected New York herds that Cornell describes as generally above average, not a state average. Hired labor $/cwt in the same series rose from $2.95 (2018) to $3.39 (2023), so record the year of any benchmark used.

Unverified

The NY DFBS figures above are confirmed. Still open: the upper end of cows per FTE (100) for large dry-lot herds, the small-herd range (25–45), and the dry-lot vs freestall $/cwt comparison. Check against USDA ERS milk cost-of-production estimates by size class and western extension or lender benchmarks.

• Scale: labor $/cwt falls sharply from small to mid-size herds, then flattens; above a few thousand cows the gains are smaller.
• State overtime rules raise labor cost per hour in states with agricultural overtime; see agricultural overtime.
• Production (illustrative arithmetic): a herd at 90 lb/cow/day spreads the same payroll over about 29% more cwt than one at 70 lb/cow/day (90 ÷ 70), so $/cwt can improve while $/cow/day rises.

Common mistakes

• Not stating the basis. Wages only, wages + taxes, and wages + taxes + benefits + housing can differ by a large margin. Always say which.
• Cash timing. Using payroll checks issued in the month instead of wages earned. Months with an extra payday look expensive.
• Mismatched denominators. Milking cows in one month and total cows in another, or milk produced in one report and milk shipped in another.
• Including crop and trucking labor in dairy labor without saying so, or leaving out heifer-raising labor in a herd that raises its own heifers when comparing to herds that contract them out.
• Leaving out contract labor. Contract milking crews, custom hoof trimmers, relief milkers and breeding technicians paid on invoice are labor cost but do not appear in payroll. Add them or say they’re excluded.
• Different FTE standards. 40 h versus 60 h per FTE changes cows per FTE by half. State the standard.
• Ignoring unpaid labor when comparing a family dairy to a fully hired one.

Related

• Cow count definitions
• Agricultural overtime rules
• Piece-rate pay on dairies
• Income over feed cost
• Energy-corrected milk