The Future of the Dairy Industry
Nov 02, 2010
From Legacy Moment eNewsletter (10/29/2010)
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I recently asked Jim Ostrom, a partner in several large Wisconsin dairies, to share his view of the future. His response was candid, but not startling.
Jim said, "I believe the dairy industry is going the way of other livestock industries. The feeder cattle industry, the hog industry, the poultry industry have all consolidated. The largest 25 producers in all those industries are very, very large in scale. The dairy industry’s largest producer has 60,000-plus cows, maybe 70,000… There are many family enterprises in the U.S. that have 25,000 cows or more. And there is nothing that indicates that trend is going to do anything but get stronger.
"There are some folks who don’t want to hear that. But, as uncomfortable as it is for them, it’s uncomfortable for us also. We spend a lot of our energy protecting our business. Risk management, by securing our crops, controlling our costs and marketing our output, is about protecting our ability to compete. I had a professor at the University of Wisconsin who said, ‘In a commodity market, there is zero net profit for an industry. There are only winners and losers.’ That is why we have to be nervously competitive. We must always be seeking a better way of producing milk."
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