COLUMBUS – Surviving the dairy industry into the next decade and beyond, according to dairy specialist Roger Cady, will not be by accident.
Dairy producers may feel as if they are being run over by a train, Cady told a full-house crowd at the annual Ohio Dairy Management Conference Dec. 4 in Columbus.
Cady, a former dairy specialist at Washington State University extension and now dairy technician with Monsanto, was the keynote speaker.
In the face of constant change, Cady said dairy has become a “how do I keep this going” kind of industry.
What dairy producers really need, he added, is to change their way of thinking and take a lesson from the potato industry.
A successful potato grower, he said, delivers a known quantity of potatoes, of a known size, to a known buyer, at an established date.
He may not own the land on which the potatoes are grown, or any of the machinery, but he uses his know-how to produce the product he has contracted to produce.
Rather than think of themselves as farmers, dairymen need to begin to think of themselves as milk producers who use the skills they have to provide a value-added, just-in-time product to a contract buyer, Cady said.
To be successful, Cady said producers will have to know what they really want to do, focus on what is essential and what they can control, and understand and know how to manage and to share the risk.
Producers who expect to thrive, to adopt the forces of change and shape them in their own interest, Cady said, also need to understand change and the forces that are driving it.
Milk production, he said, is no longer necessarily closely tied to farming.
Where production of milk is growing, the number of farms is actually declining. The states that grew the most in dairy production in the last year all had net farm losses.
New Mexico, one of the hot spots for dairy production, had an 18 percent increase in production, but lost 24 farms.
In the top 10 dairy states, Cady said not a single one has gained a farm, and the top 20 states in terms of production growth have lost 31 percent of their farms.
While cow numbers continue to grow, increasing from 24 million in 1950 to 92 million this year, the number of farms has declined from 3.6 million in 1950 to 83,025 this year.
If the loss continues at 50 percent per decade, Cady said by 2020 there will be only about 20,000 farms left.
At the same time, herd size has been doubling every decade. With no further increase in cow numbers, in the next 10 years the average size herd will grow from the current 111 cows, to well over 200.
Farmers still talk about the old days, Cady said, but there really was no such thing as a dairy industry before World War II.
Farms were closer to subsistence than production, he said, with an integrated mix of crops and animals. They made what they could and sold the rest, and the surplus from the farm went to town.
When the war ended, several things were in place that hadn’t existed before.
From wartime research came inorganic chemicals, and the manufacturing structure to turn these new chemicals into inorganic fertilizer.
Electric power that had begun to move into the countryside in the 1930s became generally available. Irrigation watered areas that had not been crop land in the past. And during the war, a huge transportation infrastructure had been created.
Farm boys came back from the war, Cady said, and used the GI bill to go to college, changing the nature of farm labor. The huge surpluses that began to appear created the beginning of cheap food policy.
Farmers turned their attention to commodity production, and became consumers of everything else they needed.
Dairy farm. It was in this context that the dairy farm, defined as an agricultural entity deriving more than 50 percent of its income from milk or milk products, took shape.
And in the intervening years, the closing of local markets, the fall in consumer demand, the fall in dairy prices has been causing huge exits from the dairy industry.
Among the remaining farms, Cady described several categories, each with its own problems and with different needs for assistance.
A large number of farms are last generation farms, farms that will not continue after current owners are gone.
“The needs of these farmers are a whole lot different than the needs of someone who intends to keep going,” Cady said.
Cady said he used to think there was no such thing as a hobby dairy farm, but in recent years he has encountered several people who fit that mold.
These are the retiring executives with a few million in the bank who say they want to recreate their grandfather’s farm, and expect to have about 75 cows.
Legacy farms, he said, are those that have been owned by a single family for several generations.
“There are dairy farms in New Hampshire that have deeds going back to King William,” Cady said. “They are now being held by the 15th generation and, believe me, their goal is not to let the farm go.”
A small number of farms, perhaps 2 or 3 percent, are becoming niche excellence farms, Cady said. They do one thing the best of anyone in their area, or perhaps anyone in the whole country.
And finally, there are the commodity farms, where everything goes toward the production of milk.
A farmer, Cady said, conducts an enterprise in which he provides the technical know-how, provides his own resources, provides his own labor, and produces commodities, assuming 100 percent of the risk.
A producer, Cady said, has both technical and business knowledge, manages his resources even though he may not own any of them, produces value-added commodities on a just-in-time schedule, and has learned how to manage his risk and shares it.
He has a plan and knows his costs and what factors are essential for his business. He does himself what he can do best and hires the rest, and has learned to control what he can and to manage around the rest.
And most of all, Cady said, “he commits himself to lifelong learning.”