Why Dairy Needs to Export
Sep 28, 2009
By Jim Dickrell
There are those who want to close the borders to imports, forget exports and shut off immigration.
In last week’s September 2009 Outlook, Penn State economist Jim Dunn published a very simple chart, which can be found on page seven when you follow this link. If there was ever a more simple response to these arguments, I haven’t seen it.
Over the past 20 years, Dunn plotted U.S. population, U.S. cow numbers and milk per cow. The U.S. population has been has been growing about 1% per year over that time frame. Cow numbers have dropped from nearly 10 million cows in 1990 to about 9.2 million today. By sometime next year, we’ll dip below 9 million. But milk per cow has shot up from 14,800 lb. in 1990 to more than 20,000 lb. today, or roughly a 2% per year increase. That’s an astounding productivity gain, compounded year after year after year.
Per capita consumption, the amount of dairy products the average U.S. consumer consumes, bounces around. In the first part of the period beginning in 1990, it actually fell. More recently, it has increased slightly. But over the entire period, it has been essentially flat.
So the bottom line is this: “It is apparent that production per cow is growing faster than the population. As a result, …each year fewer cows would be needed to provide the milk than the domestic market would require,” writes Dunn. “It is the major reason that if the industry is going to maintain or grow, it must export milk.”
Others want to restrict imports, saying they’re unneeded, given the U.S. dairy producer’s capacity to make milk. But such restrictions will inevitably lead to other countries placing restrictions on importing from us.
Still others want the U.S. to institute a supply management program. But even here, annual productivity gains of 2% will mean fewer and fewer cows will be needed to fill the quotas each year. A study several years ago showed Canadian dairy farm numbers, even with quotas, declining at the same rate as U.S. dairy farm numbers. Go figure.
And some folks want to send all the illegal aliens back across our southern border. They blame this access to cheap labor to the rapid rise of large scale dairy farms. But ask any dairy producer who employs Hispanic labor, and he or she will tell you they are no cheaper than the home-grown variety—plus they have the uncanny ability to show up for work every day and complete their shifts. The problem with locally-grown labor, the Great Recession not withstanding, is that few want to spend eight hours standing in a milking parlor or riding on a skid steer pushing manure.
As the industry works its way through the current price crisis (and if you read the first part of Dunn’s report, things are improving), we need to keep the above points in mind:
Per cow productivity will continue to improve. Restricting imports creates more problems than it solves. And participation in the global economy is essential to the future vitality of the industry.
—Jim Dickrell is editor of Dairy Today. You can reach him via e-mail at email@example.com.
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