what is going on in some of the traditional dairy states? by bob cropp dairy marketing an policy...
TRANSCRIPT
What is Going on in Some of the Traditional Dairy States?
By Bob Cropp
Dairy Marketing an Policy Specialist
University of Wisconsin-Madison
A brief look at:
• Existing dairy farm structure
• Changes in:Dairy farms
Milk cows
Milk per cow
Milk production
• Potential in traditional states
Change in milk productionNew Mexico
Idaho
California
Arizona
Kansas
Colorado
Vermont
Pennsylvania
Washington
Maine
0 20 40 60 80 100 120 140 160 180
% Change
Largest Per Capita Increases1990 to 2000
Tennessee
Wyoming
Arkansas
Alabama
North Dakota
North Carolina
Mississippi
Missouri
Alaska
Illinois
0-10-20-30-40-50-60
% Change
Largest Per Capita Decreases 1990-2000
-16-29
-13
+5
+35
+91
-13
-14
-44
+31
+11
+186
+3
-12-14
-5
+13 -32
-44
Percent Change In Per Capita Milk Production
2000vs 1990
-34 -38
-16-37
-12 -13
+9
+2
-32 -5 -9
-45
-32
-21
-28
-3 +3
+2
+9
-11-17
-36
-8
-31
+5
-21
-10
-19
-21Percentage Changes
Decreasing (34)Increasing (14)
Dairy Farm Structure, Selected States, 2001 Top number % of herds, bottom number % of milk
State 1 –29 cows
30-49 cows
50-99 cows
100 - 199 cows
200+ cows
CA 12.0 0.1
2.8 0.1
3.2 0.2
10.0 2.0
72.0 97.0
ID 23.0 0.2
8.0 0.6
21.0 3.1
15.0 4.6
33.0 91.5
WA 30.0 0.1
4.0 0.4
11.0 2.5
19.0 10.0
36.0 87.0
AZ 48.0 0.1
0.0 0.0
4.0 0.2
4.0 0.5
44.0 99.2
NM 67.0 0.1
0.0 0.0
1.0 0.1
1.0 0.4
31.0 99.4
MO 43.2 3.0
18.9 15.0
23.0 30.0
16.2 38.8
1.4 14.0
NC 48.9 0.4
4.4 1.6
18.9 17.0
17.8 33.0
10.0 48.0
TX 45.2 0.3
4.8 0.7
11.9 4.0
15.2 14.0
22.9 81.0
Continued.
Dairy Farm Structure continued: State 1 –29
cows 30 – 49
cows 50 – 99
cows 100 –
199 cows 200 + cows
NY 18.1 1.5
16.7 6.5
38.9 25.0
18.1 28.0
8.3 39.0
PA 17.5 3.0
35.9 22.0
35.0 37.0
8.7 21.0
2.9 17.0
VT 8.1 0.5
16.9 5.5
48.8 28.0
16.9 23.0
9.4 43.0
MI 31.8 3.0
16.7 5.5
24.2 15.5
18.8 27.0
8.5 49.0
OH 46.2 5.8
16.3 12.0
24.0 30.0
10.8 30.0
2.7 23.0
MN 14.1 3.0
34.6 18.0
38.5 37.0
8.9 17.0
3.8 25.0
WI 16.5 2.7
27.7 13.3
40.8 36.0
10.5 19.0
4.6 29.0
IA 23.4 4.0
25.4 11.0
34.3 35.0
13.7 29.0
3.1 21.0
IN 51.7 7.0
16.2 10.0
19.7 24.0
9.7 25.0
2.8 34.0
U.S. 28.9 1.6
20.4 6.7
29.9 18.2
12.6 16.5
8.2 57.0
Changes in number of dairy farms, cows, milk per cow, and total milk production, 1993-2001
State % Ch farms
Ave. Size Herd
% Ch cows
Ave. milk/cow
% Ch. Per cow
% Ch total milk
CA
-40.5 636 34.5 20,913 7.6 45
ID
-41.1 366 93.6 21,194 24.6 140
WA
-66.7 247 -3.9 22,324 15.2 11
AZ
-50.0 560 37.3 20,679 12.4 54
NM
-54.5 536 97.0 20,750 7.7 112
TX
-58.0 155 -15.6 15,689 2.2 -14
MO
-50.7 39 -34.7 13,441 5.5 -31
NC
-25.0 74 -28.7 17,373 10.0 -22
KS
-29.4 78 14.8 17,312 26.3 49.1
NE
-62.1 65 -21.7 16,056 31.3 3
Changes in number of dairy farms, cows, milk per cow, and total milk production, 1993- 2001, continued.
State % Ch farms
Ave. Size Herd
% Ch cows
Ave. milk/cow
% Ch per cow
% Ch total milk
NY
-38.5 93 -10.2 17,527 14.8 3
PA
-20.8 58 -7.8 18,112 13.1 16
VT
-36.0 96 -5.6 17,431 13.1 7
OH
-35.0 50 -14.8 16,612 9.5 -7
MI
-34.0 92 -10.6 19,323 20.5 8
MN
-42.2 65 -21.3 17,278 15.4 -9
WI
-36.3 68 -17.0 17,182 16.3 -4
IA
-37.5 60 -28.8 18,024 31.2 -7
IN
-32.6 126 6.3 16,732 7.3 14
U.S.
-39.9 93 -6.1 18,139 16.7 10
So What ?• Milk production will continue to grow in the
West, but at a slower rate and mainly by adding cows.
• Milk production declines may slow in some traditional dairy states and in fact, begin to increase within 5 years as a result of slowing the decrease in cow numbers, an increase in milk per cow and an increase in herd size
• Milk production will increase in other states like NE and KS, with newer large herds.
Reasons for some optimism for traditional dairy states:
• Cost of production data demonstrates that modern style large dairies located in WI, MN, IA, NY, PA and others can compete with those in the West, and more of these will locate here—how many depends upon whether the states want them.
• Smaller herds—50 to 99 cows—can make changes at affordable cost to grow to the 100 to 200 size and at a very competitive cost of production.
It depends upon whether the 50 to 99 cow herds are willing to abandon traditional “barn-based” dairy systems in favor of “parlor-based” systems.
• Until recently, moving to a parlor-based system was costly---$250,000 + for 500 + cows.
• Recently, thinking outside the box has resulted in parlor-based systems at much lower costs---$50,000 to $100,000---for herd size of about 125 cows.
Low cost parlor-base systems:
• Remodel existing barn and place parlor in them
• These parlors are nearly as efficient as brand new parlor set-ups
• Primary pay-off is labor savings---double eight parlor system allows one person to milk 100 cows in about 2 hours versus almost 5 hours with a stall barn system.
• Works well for about 125 cows, about twice the average herd size now in MN, WI and IA
There are several of these low cost parlors now in operation in Wisconsin.
• The word of mouth is growing of successes.
• Both MN and WI have state funds available for business plans
• Wisconsin has a new milk volume loan program—low cost loans up to $1 million, if add cows.
Rates of Return on Parlor Investment of $50,000 or $100,000
Cows in herd
Investment of $50,000 With Useful Life of:
5-years 10-years
Investment of $100,000 With Useful Life of:
5-years 10-years 50
5.49% 14.98% - 8.49% 2.97%
75
17.50% 25.13% - 1.16 % 9.33%
100
28.42% 34.44% 5.49% 14.98%
125
38.65% 43.31% 11.67% 20.20%
150
48.42% 51.92% 17.50% 25.13%
175
57.86% 60.39% 23.06% 29.85%
200 67.06% 68.77% 28.42% 34.44%
It is very possible that within 5 to 10 years, the increase in cow numbers and milk production of herds of 100 plus cows in WI and IA and maybe MN will
Offset the decline in cow numbers and milk production from continued exiting of herds of less than 100 cows.
This may apply to some other traditional dairy states—NY and PA, for example.
Wisconsin Dairy Industry Production Factors 1993-2001
Herds less than 50 cows Number of cows Total milk (Bil. Lbs) Milk per cow
1993 526,163 34.1%
7.35 30.8% 13,372
2001 228,684 17.7%
3.552 16.0% 15,531
Herds 50 – 99 cows Number of cows Total milk (Bil. Lbs) Milk per cow
678,920 44.0%
10.05 44.0% 14,804
490,960 38.0%
7.99 36.0% 16,278
Herds of 100 cows + Number of cows
Total milk (Bil. Lbs) Milk per cow
337,917 21.9%
5.76 25.2% 17,036
572,356 44.3%
10.67 48.0% 18,617
All herds Number of cows
Total milk (Bil. Lbs) Milk per cow
1,543,000 100.0%
22.84 100.0% 14,804
1,292,056 100.0%
22.20 100.0% 17,305
Estimated annual growth rates, Wisconsin herds:(What has been occurring since 1993)
• Herds of less than 50 cows:Number of cows - 9.58%
Milk per cow 2.15%
• Herds of 50 to 99 cows:Number of cows - 3.85%
Milk per cow 1.33%
• Herds of 100 cows or more:Number of cows 7.34%
Milk per cow 1.54%
Forecast Cows, Milk Per Cow, and Total Milk, 2010, if Trends Hold
Factors Forecast Herds of less than 50 cows: Cows Milk per cow
Total milk (Bil. Lbs.)
110,462 19,116 2.11
Herds of 50 to 99 cows: Cows Milk per cow
Total milk (Bil. Lbs)
356,930 18,815 6.72
Herds of 100 cows or more: Cows Milk per cow Total milk (Bil. Lbs.)
1,077,194 21,111 23.82
All Herds: Cows Milk per cow
Total milk (Bil. Lbs.)
1,544,586 21,135 32.65
Will these forecast come true? Most likely not exactly; but
• It depends• Environmental regulations• State and county regulations on animal units• State assistance—financing, business planning• Producer to producer encouragement• Attitude—stop blaming all problems on federal
orders and dairy policy• These traditional dairy states have some real
pluses for milk production---feed, climate, infrastructure