By Shirley Chapman
Pennsylvania is a milk deficit state. Cow numbers have been slowly declining, but even more important is that milk per cow has not kept pace with other top dairy states, explains John Frey, executive director of the Center for Dairy Excellence.
Milk per cow averages 21,000 lb. in the DHIA herds (3,300 of 7,000 herds). An increase to 24,000 lb.—what other top dairy states achieve—would improve farm profitability and help meet processor demand, Frey says.
- Extended comments are highlighted in blue
The past few years have challenged Pennsylvania producers. An economic recession, a spike in feed cost, drought, two hurricanes and an increase in the cost to comply with environmental regulations have made it hard to grow or improve.
However, producers have learned from the past and are cautiously optimistic about the future. Here’s why.
Strengths. Good climate for cows and crops, land base and availability of water top the list of strengths. In most years, producers grow excellent-quality forages and crops without having to irrigate, explains Alan Zepp, dairy risk-management program manager at the Center for Dairy Excellence.
In addition, the state has excellent dairy infrastructure, can deliver milk to 60% of the U.S. population in just one day, and has easy access to five ports to supply growing global demand. A strong Class I processor industry, as well as upgrades and expansions at other plants, have demand for milk on the rise.
Producers here have always known how to take care of the cows. The downturn in 2009 showed them the value of improving their business skills and of learning to use more types of risk-management tools.
Weaknesses. Many Pennsylvania producers feel the level of regulation is oppressive. But an analysis by the National Soybean Board found that regulations in Pennsylvania are not that different from other dairy states, Zepp explains.
Thirty-eight of 67 counties lie in the Chesapeake Bay watershed, however. That means producers must comply with the Clean Water Act, too.
The biggest frustration here is the feeling that federal regulations are a constantly moving target. Also, the cost of compliance for engineering, agronomy and other consultants, along with additional site work requirements has increased by 40% in five years.
Many old dairy facilities would benefit from modernization, but the current permitting and regulatory requirements often deter investment.
Opportunities. With margins showing improvement, producers now must ask themselves which strategy to implement. Research shows that fundamentally improving milk per cow, increasing cow numbers to fill barns and using land to capacity to boost forage production make sense for producers, Frey says. Modernizing facilities can improve cow comfort and create labor efficiencies. Used together, these strategies can help producers optimize assets, grow milk production and improve profitability.
In addition, improving marketing labels can help the industry compete better with other beverages. More attractive labels that list reasons why consumers should buy milk are an important component of this.
While fluid milk consumption has been declining, demand for yogurt, dairy ingredients and exports are all predicted to grow.
The advent of a robust natural gas industry in the state also gives producers another way to diversify or an exit plan, if they choose. Time will tell the impact on the industry.
Threats. Beyond burdensome regulations, recently agricultural land prices in the state climbed to $20,000 per acre. Without enough land to produce the forage and crops needed for a larger dairy, producers here usually choose not to expand.
Rising costs to comply with environmental regulations, compounded with concerns that federal regulations might change, deter growth. Change is needed to give dairies the confidence to reinvest in their facilities and accommodate an active and interested next generation.
For more information
The Center for Dairy Excellence recently completed a study, "Pennsylvania Dairy Futures Analysis." You can read it online at:
- April 2014