A new report identifies better business practices, herd health and risk management as opportunities for higher profitability.
Pennsylvania, still the fifth largest U.S. milk producing state, is not keeping pace with production increases of competing top dairy states, according to a year-long analysis conducted by Pennsylvania’s Center for Dairy Excellence (CDE).
"The analysis was a comprehensive year-long review of Pennsylvania’s dairy industry to identify historical trends and needed interventions in the production, processing and consumption segments of the industry," says John Frey, CDE Executive Director.
The analysis shows that Pennsylvania is geographically well-positioned near large consumer population centers. But a decline in fluid milk sales has changed the region’s milk blend price, with more milk now moving into Class II yogurt sales. Nevertheless, products labeled as "local" or "100% high quality" resonate with consumers’ taste for locally produced, high quality dairy products.
State dairy farmers also have not kept pace with industry standards. From 2008 to 2012, milk production has increased just one pound per cow per day. "If Pennsylvania’s rolling herd average grew from 21,000 lb. to 24,000 lb., that would translate to 1.6 billion lb. more milk annually," says the report.
Small herds, those with less than 50 cows, are out-performing similarly sized herds in Michigan, Minnesota, Wisconsin and New York. But production per cow from herds with more than 500 cows is the lowest among the five states. As a result, Pennsylvania’s rolling herd average is the lowest of these states.
Many farms also produce grain and other crops for cash. "If the 600 herds surveyed with under 100 cows increased the percentage of their cropland use for dairy forage production by 10%, an additional 6,000 cows would be supported by those dairies," says the report. "That, in turn, would allow those farms to optimize their assets and spread fixed costs over additional units of milk production."
Along with these production issues, the report identifies better business practices, herd health, risk management as opportunities for higher profitability. It also challenges dairy processors to do a much better job marketing dairy products to reverse fluid milk sales declines.
The analysis was a joint effort by CDE, Penn State, the University of Pennsylvania and the Saint Joseph University School of Food Marketing. You can read more here.