No matter how you look at it, Pennsylvania’s dairy industry is unique. The Keystone State has ranked among the top five dairy-producing states ever since the USDA started tracking milk production in 1964. However, over the past 10 years, Pennsylvania’s position as a national dairy leader has been slipping.

The state is home to the second-largest number of dairy farms in the country, second only to Wisconsin. The average herd size in Pennsylvania of 65 cows is well below the national average of around 125, with the number of total milk cows in the state continuing to decline.

While many states have compensated for fewer cows by increasing milk production per cow, Pennsylvania hasn’t kept pace with national trends. Pennsylvania’s milk production per cow is up only 6.4 percent from 10 years ago, while the average increase in milk production per cow in the top 23 dairy-producing states is 13.5 percent.

In 2012, the Center for Dairy Excellence decided to compare these statistics to other dairy regions to analyze historical trends and identify opportunities for intervention leading to greater growth of Pennsylvania’s dairy industry.

The study, called “The Pennsylvania Dairy Futures Analysis,” was a year-long project undertaken by the Center for Dairy Excellence, the Penn State Extension Dairy Team, the University of Pennsylvania School of Veterinary Medicine and Saint Joseph’s University School of Food Marketing . It analyzed trends in milk production, dairy processing and dairy sales.

The analysis reaffirms that dairy in Pennsylvania is at a crossroads. Tremendous opportunity exists within the northeast region for Pennsylvania’s dairy farm families to thrive. However, if we continue on the path we are on, the commonwealth’s role as a national dairy leader will continue to be threatened.

What we found in the analysis is that, for Pennsylvania’s dairy farms, getting bigger is optional. However, getting better at efficiently producing additional milk per cow is critical, both to the viability of the individual farm and the growth of the broader dairy industry.

We began this study with several assumptions of what we know about dairy in the U.S. and in Pennsylvania.

1. Dairy exports continue to grow, with more than 13.0 percent of the U.S. milk supply being utilized as dairy exports in 2012. This presents a huge opportunity for Pennsylvania, based on its proximity to the Eastern seaports.

2. Class I utilization in Federal Milk Marketing Order I (which includes Pennsylvania) is among the highest in the country. The utilization has slipped in the past 10 years from 45 percent to just under 40. However, milk prices in the Northeast are still among the highest in the country.

3. Pennsylvania and other states in the region have opportunity to increase milk production, with Class II dairy processing plants dramatically increasing their processing capabilities and in need of additional supply.

4. Pennsylvania has the highest concentration of herds under 150 cows out of the top five dairy-producing states. The commonwealth is home to 1,300 50-cow dairies, more than the combined total of 50-cow dairies in Michigan, Minnesota, Wisconsin and New York.

5. Pennsylvania has significant attributes that appeal to dairy production – access to markets and natural resources such as water, a seasonal environment and high-quality soils.

However, encroaching development, high land prices and increasingly strict environmental regulations within the Chesapeake Bay watershed limit widespread expansion opportunities.

6. Pennsylvania has not kept pace in increasing its milk production per cow. The average annual increase in milk production from 2006 to 2011 in the Northeast was 234 lbs, while the commonwealth’s milk production per cow only grew by 42 lbs.

Although New York shares a similar climate to Pennsylvania, its average increase in milk per cow is well above both Pennsylvania and the national average.

7. The cost to increase a state’s milk production by one million pounds, according to a 2011 Northeast Dairy Farm Summary conducted by Farm Credit East , changes dramatically depending on how you generate that increase.

If you add more cows at the same production level, it will cost $181,000 in “infrastructure costs.” A production increase of one million pounds through additional milk per cow costs $99,940, a savings of nearly 45 percent.

From this information, the four organizations outlined a plan to evaluate producer demographics, production trends and interventions to drive both supply and demand.

Data from regional Dairy Herd Improvement organizations and Farm Credit associations was collected to analyze Pennsylvania’s trends in dairy production and how it compares to other states across the nation.

The analysis took information from four other states that had similar environments and dairy infrastructures to Pennsylvania and compared their production levels to those in the commonwealth.

The four states evaluated to provide a baseline included Michigan, Minnesota, Wisconsin and New York. What the data showed is that Pennsylvania’s dairy industry simply hasn’t seen the consolidation that the other states have had.

New York led the way in the growth of milk coming from farms with more than 500 cows, with an increase from 20 percent of the milk coming from dairies with 500 cows or more in 2001 to 40 percent in 2007.

In Pennsylvania, that portion of the milk supply only grew by 7 percent, from 5 percent coming from herds with more than 500 cows in 2001 to 12 percent in 2007. Minnesota and Wisconsin’s percentages both grew by 12 percent.

Rolling herd averages in the five states were evaluated to identify common trends. What the data showed is that Pennsylvania’s 50-cow to 100-cow dairy herds led the way in milk production per cow in that herd size category.

However, all five states saw an increase in annual milk per cow of 6,000 - 7,000 pounds as herd sizes moved from 50 cows to 500 cows.

The data also looked at all farms in each size category to find a range in annual milk production per cow. In the smaller herd-size category, farms ranged from 12,000 pounds to 30,000 pounds, while at 450 cows, that range narrowed to 20,000 to 30,000 pounds.

This data clearly indicated that some smaller herds can and do achieve relatively high production levels, but the group on average has not achieved these higher levels of milk production with the same frequency as larger herds have.

That trend was further documented when we looked at the change in milk production per cow in varying herd sizes over a five-year period. Looking at the collective data from the five states, herds with more than 250 cows have increased their annual milk production per cow by 11 percent since 2001, while the average annual milk production per cow of herds with less than 100 cows has increased by only 4 percent in that same time period.

In addition to increasing milk production per cow, the data from the five states also showed that other key management areas improved as herd size increased.

Calving intervals fell on average by 1.5 months as herd size moved from 50 cows to 550 cows, and pregnancy rates increased by 2 to 4 percent. In all five states, somatic cell counts fell by 50,000 as the average herd size went from 50 to 500 cows.

The Pennsylvania Dairy Futures Analysis clearly reflects the most efficient and profitable way to grow individual farm profitability and the region’s milk production is by adding additional milk production per cow.

Our goal is to use this analysis as a springboard to challenge all dairy farms to achieve higher per-cow milk production growth. This can be done regardless of the herd size or what state the dairy is located in.

Look for more information about the analysis to be released in the coming months. Click here to visit the Center for Dairy Excellence website and go to “Dairy Information” to access updates about the analysis. PD

John Frey
Executive Director
Center for Dairy Excellence