Dairy Excel: Will dairy industry follow trends of poultry and pork livestock sectors?

Several recent reports by the National Agricultural Statistics Service have generally showed a trend toward more and more milk being produced by larger and larger herds, with the share of milk produced by small herds dwindling.

Many of the reports indicate that the poultry industry did this first, the hog industry followed and now this is happening to the dairy industry.

Yes, regrettably for our medium- to small-herd producers, that is the way I see the trend also. The accompanying charts highlight some of NASS reports.

My interpretation of the above data is that in 1994 about the same proportion of hog farms (27 percent) were large operations as the proportion of large dairy farms now (29 percent of farms with 500 or more cows in 2001).

As the hog industry evolved into being concentrated more and more in larger farms (75 percent large farms now), the efficiency of the industry measured as pigs/sow/year drastically increased from 10.3 pigs to 16.2 pigs, primarily due to more litters/sow/year in larger operations.

I mentioned above that the trend toward more of the production being concentrated in larger farms started in poultry industry. Maybe we should then look at the poultry industry trends in Ohio to see what might be in store for us in Ohio?

Since 1975, poultry has been the only major Ohio agricultural commodity or wholesale industry, (not including floriculture or horticulture) that has taken market share away from the rest of the United States.

The number of laying hens has tripled since 1975 and broilers and turkeys have tripled in Ohio since 1980. Other livestock numbers and market share have slipped in Ohio during that time.

It took the hog industry six years to make the transition from about a fourth of the pigs to three-fourths of the pigs being produced on large farms.

What does that mean for the dairy industry in six years – in the year 2008? Looks like the rolling herd average that will set milk price will be over 20,000 pounds/year/cow.

Will the dairy industry follow the hog industry with three-fourths of the milk being produced on large farms? Is the trend of Dutch dairy farmers setting up large herds in central and northwestern Ohio going to continue and result in three-fourths of the milk produced in Ohio being produced on large farms?

What does this mean for the numbers, bargaining strength and political clout of the small dairy farmer?

Organic interest. Another trend is that organic production is on the increase, and in this case small farms are increasing in numbers. Granted, this expansion is not with wholesale or commodity production but mainly in retail sales.

The organic industry is growing between 20 and 25 percent annually, and has been for the last several years. U.S. retail sales of organic foods reached approximately $7.8 billion in 2000, with global sales topping 17.5 billion.

For dairy producers to acquire the “organic” premium, newly adopted and approved Ohio and federal organic standards be met, but dairymen must assume more of the marketing risk and cost. Efforts to establish organic milk marketing groups have been slow, but have been and will be established.

The USDA’s national organic standards for agricultural products has just been launched, which means that organic milk and food that is at least 95 percent organic must now bear the USDA organic seal. The standards will assure consistency in organic foods produced across the United States and will allow organic foods to move coast to coast if need be.

Food products that are 70 percent to 95 percent organic can say so on the label but cannot display the USDA organic seal.

What does a dairy producer have to do to produce organic? The exact regulations are not yet available, but suffice it to say that organic feed must be fed and any pasture must have been managed organically without commercial fertilizer. If medications are needed there will be a much longer withholding period to sell organic milk and there will be a requirement that for at least part of the year the cows will have to be on pasture.

Is organic for you? Likely not, but is organic a better alternative for dairy families than milking 2,000 cows? Maybe.

(The author, an OSU Extension ag agent in Lorain County, is a member of OSU’s Dairy Excel team. Questions or comments can be sent in care of Farm and Dairy, P.O. Box 38, Salem, OH 44460.)

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