Fewer But Larger

Published on: 11:01AM Feb 18, 2009

Two USDA agencies have released recent reports that provide additional confirmation of what everyone in agriculture should recognize by now, which is that the inexorable trend of fewer but larger farms continues to reshape the dairy farming landscape.


The more noticed report was last week’s National Agricultural Statistics Service annual summary of the number of farms – what gets referred to as the annual farm census.  It found that there were 2.2 million farms in the U.S. last year, and of those, 67,000 were dairy operations. 


What’s interesting is that of those 67,000 dairies, the largest 5% (farms with  500+ head of dairy cattle), some 3,500 of them, produced 59% of the nation’s milk supply last year.  Their share of the milk supply grew to 59% from 57% in 2007.


So while on the one hand, it’s still accurate to say that most dairy farms are small – 60,000 of the 67,000 have 200 head or fewer – it’s also true that the largest farms are generating a growing majority of the nation’s milk supply. 


As to the reasons for this trend, a report issued in January by the Economic Research Service delved more deeply into the hows and whys of the NASS data.


In a report entitled “The Transformation of U.S. Livestock Agriculture”, the USDA’s ERS found that large-scale dairy operations (defined as those with 1,000 head or more) enjoyed a 15% advantage in cost of production compared with smaller farms, due to greater efficiencies.  Given that kind of advantage, it’s not hard to see why milk production continues to grow at larger farms.  The same advantage, it must be pointed out, is also affecting all other species of livestock agriculture, and for that matter, crop and fiber producers as well.


So the big question today is, given the depth of this recession and its impact on dairy prices, will the current crisis, which is clearly affecting larger farms harder than smaller ones, significantly alter this trend, or just provide a momentary speed bump?  We’ll know more when next year’s farm census report comes out.