'Dairy Pros' Talk About Industry’s Future in Pa.

5/4/2013 7:00 AM
By Charlene M. Shupp Espenshade Special Sections Editor

LANCASTER, Pa. — Pennsylvania’s dairy industry seems to buck the trend. Compared with its neighbor to the north, where the dairy farms continue to grow and consolidate, Pennsylvania is maintaining many of its smaller dairies.

Last week, the Center for Dairy Excellence held its Dairy Pros meeting at the Lancaster Farm and Home Center, bringing together dairy consultants with members of Penn State Extension and center staff to discuss what they are seeing in the dairy industry.

Overall, consultants are positive because milk prices are driving up returns on dairy farms. And according to the Pennsylvania Dairy Scorecard, the state’s farms produced more milk this past March compared with a year ago. In contrast, national milk production decreased.

John Frey, the center’s executive director, discussed the outcome of the Pennsylvania Dairy Futures Analysis. It was a project by the center, Penn State Extension, St. Joseph’s University and the University of Pennsylvania’s College of Veterinary Medicine.

The study analyzed historical dairy data, surveyed dairy farmers and looked at what milk label claims influenced consumer purchases.

There has been significant national growth in milk production, and more than half of that growth is heading to the export market.

Currently, the U.S. is exporting about 14 percent of its milk production, which equals the total milk production of the state of Wisconsin. Meanwhile, the growth of the domestic Greek yogurt industry consumes the equivalent of Pennsylvania’s milk production.

“We have always said this is a mature industry, (but) I am not sure.” Frey said, reflecting on the changes in the marketplace.

Frey also talked about how farms can produce additional milk, either by adding more cows or increasing milk per cow.

According to data from the Northeast Dairy Farm Summary by Farm Credit East, to add cows to produce 1 million pounds of milk would cost $181,000. But it would cost only $99,940 to increase milk production per cow to reach the same goal.

Frey said Pennsylvania “remains an anomaly” because it has less consolidation than other leading dairy states. While there is not one direct reason to explain the situation, he said, the state continues to “buck the trend.” Also, other dairy states have seen a larger percentage of their milk coming from larger dairy herds.

The study pointed out that there is a growing separation in milk production per cow between smaller dairy herds — those milking fewer than 100 cows — and larger herds — those milking 250 cows or more.

Frey stressed that this is just an average and there could be high producing small herds, but overall, the highest producing dairies tend to have the larger herds, according to Pennsylvania DHIA data.

Frey said all herds need to improve dairy profitability through better reproductive management, feed management, cow comfort and overcoming other farm bottlenecks.

“Our message is to get better,” Frey said.

He also said that many of the successful larger dairies started out as successful small and medium-size dairies.

“They were not average dairies,” he said.

Rob Goodling from Penn State Extension provided an update on a program that works with farms to improve farm profitability.

The past couple of years the program has focused on feed management. This past year, the study looked at double-cropping to maximize acreage for feed production.

“The key is actually to match production to acres,” he said. “And maximize both sides of the equation.”

“We need to have a better efficiency on our farms,” Goodling said.

He recommends that consultants help producers work through the “what if” scenarios on their farms and think about how they can change profitability.

Frey concluded by touching on the milk labeling study conducted by St. Joseph’s University.

“Pennsylvania milk sales have been declining for some time,” he said.

The university conducted a survey targeting 1,500 consumers to determine how they looked at label design and label information, and how that influenced their purchases.

“The most effective attributes are quality and origin,” Frey said about the preferred labels.

The study found that most milk labels did not have either on their labels.

The labels that had the greatest impact used the term “100 percent fresh.” Second was “from your local farmer” followed by “rbst-free.”

The conclusion from the study is that dairies need to make better use the label to market fluid milk.

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