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“Why Dairy”. By Bob Cropp Professor Emeritus University of Wisconsin-Madison Presented at “Why Dairy” Fort Dodge, Iowa June 14, 2005. Dairy is a growing industry. Iowa has an opportunity to participate in this growing industry. And we know that Iowa is a very good place for dairying.
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“Why Dairy” By Bob Cropp Professor Emeritus University of Wisconsin-Madison Presented at “Why Dairy” Fort Dodge, Iowa June 14, 2005
Dairy is a growing industry. • Iowa has an opportunity to participate in this growing industry. • And we know that Iowa is a very good place for dairying. • And we know that Iowa can be competitive in producing milk, process it and market it at a profitable level
2.25% 0.9% 0.8% 0.2%
Per Capita Consumption 2004 594 pounds total 204 pounds beverage 306 pounds cheese 84 pounds other
What is going on with regional dairy product production? Top 5 cheese states 2000 vs 2004
Iowa’s rank in cheese production: 154,757,000 pounds in 2004 8th largest cheese producer 1.7% of U.S. total
Is milk prices a factor in these shifts in milk production? • The answer is no. • There other reasons such as: • Production advantages • Entrepreneurship/innovators/business oriented • The states want dairy– they see it as growing their economy
So why dairying makes economic sense in Iowa? • Iowa is the ability to produce milk and manufactured dairy products competitively and profitability. -- Excellent feed supply -- Excellent climate for dairy cattle -- Good infrastructure (vet, feed source, equipment, milk plants, etc. -- Good location for making and marketing manufactured dairy products
2. If Iowa doesn’t grow its dairy and other livestock, it threatens the infrastructure. -- manufacturing milk plants will not invest under an environment of a declining milk supply. -- manufacturing milk plants need more milk to serve/meet the customer needs of a growing dairy industry. -- livestock services will deteriorate as dairy and other livestock decline
3. Iowa is in a good location to serve a growing cheese industry. • The growth will continue with cheese.
You need to be large and competitive in commodity cheeses. • But, there is also a growing opportunity in specialty cheeses. • In 2004, there were more than 350 specialty, artisan and farmstead cheeses identified. • While total U.S. cheese consumption has grown 15% over the past decade, specialty cheese consumption has increased 75%. • In 1994, 1 out of every 15 pounds of cheese consumed was specialty cheese; today it is 1 out of 10
4. Dairying can add to the economic growth in Iowa. • Dairying has a relatively high economic .multiplier. This is not hard to understand when one considers a dairy operation: • Buys feed, machinery, electricity, vet. and nutritional services, A.I., agronomy supplies, builds buildings, etc. • Markets milk which needs to be transported, processed and marketed • Sells dairy calves and culled dairy cows which are processed and marketed • Dairy beef is another potential enterprise • Is a market for by-products of Iowa’s ethanol industry • Dairying simply creates a lot of jobs.
A recent Wisconsin impact study: • About $3.4 billion of farm sales of milk • But, the dairy business contributes $20.6 billion each year to the state’s economy. • Dairying accounts for nearly 40% of all WI agriculture jobs. • Dairying offers more than 300 different career jobs. • 99% of WI dairy farms are family owned.
How a 250-cow WI dairy farm contributes to the local economy: • $175,000 at local retailers • $157,000 in feed supplies • $111,000 for employee wages & benefits • $45,000 in interest payments at the bank • $39,000 in land rent to neighbors • $37,000 at equipment dealers • $36,000 in supplies at the local cooperative • $28,000 at the veterinary clinic • $20,000 for local consultant services • $18,000 in utility bills • $9,000 in property taxes • Total: $675,000 per year The average cow generates more than $17,000 a year in statewide economic activity which circulates throughout the local community.
5. If Iowa won’t do it someone else will. --Markets and economic incentives work. --Someone will step forward to take advantage of a growing profitable market. --And Iowa is in as good of a position as any state to take advantage of these opportunities in dairying.
6. It can be profitably accomplished by more than one style dairy. -- Smaller dairies, 100 to 200 cows, can be competitive and profitable; Iowa needs smaller dairies to modernize and to grow. --Even smaller dairies may be profitable by entering unique markets -- Graziers as well as dry lot dairies -- Large dairies
The reason why Iowa needs smaller dairies to modernize and grow. • Over 44% of the herds have fewer than 50 cows and will likely be exiting. • There is another 28% with 50 to 99 cows that likely have out-dated and relatively labor intensive operations—they may be able to utilize some existing facilities, invest in a low cost parlor, build a free stall for cow comfort and reduced labor requirements. • Iowa will not grow its dairy industry entirely with new large dairies.
Why Dairy? It makes economic sense for Iowa.
