Changes in the Structure of Ohios Dairy Industry

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Changes in the Structure of Ohios Dairy Industry

• Maurice L. Eastridge
• Professor

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FOOD ANIMAL
AGRICULTURE
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Food Production System - Quality All The Way
Distribution
Harvesting
Processing
Preparation
Production
FARMER
CONSUMER
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Ohio's Animal Agriculture
Economy
Food
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Price of Milk
GAP
8.6 lb/gal milk
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Ohio Dairy Farms
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• 1944 25,597
• 1979 June 10,706
• 1983 Nov. 11,137
• 1985 Jan. 10,801
• 1986 Jan. 11,177
• 1987 Sept. 10,411
• 1990 9,993
• 1995 9,466
• 2000 9,199
• 2001 9,103
• 2002 9,139
• 2003 9,083
• 
  9,012
• 
  9,043
• 
  9,112
• 
  9,189
• 
  9,315

Just before diversion
Diversion period low
Whole herd buyout decrease
US Milk Cows (x 1,000)
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Dairy industry trends

• Decrease in farms
• Decrease in cows?
• Increase in cows/farm
• Increase in milk yield/cow

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Ohio Dairy Industry
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Ohio Dairy Industry
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Multiplier Effect of Ohios Dairy Industry
Value of milk marketed in Ohio for 2007 was 991
million
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Proportion of Milk Produced in Ohio from Herds
with gt 200 cows
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Dairy Herds by Size in Ohio
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Where do we rank in 2007?
(1986 259)
(1986 82)
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Breed Differences
Ohio DHIA, 2007
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Specialization
Diversification
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15 Measures of Dairy Farm Competitiveness (2008)
Rate of Production 1) Pounds of milk sold per
worker Tie stall or stanchion Free
stall/parlor Large breed gt 600,000 gt
1,000,000 Small Breed gt 450,000 gt
750,000 Cost Control 2) Total feed cost of milk
sold lt 7.00/cwt 3) Milking herd feed cost of
milk sold lt 4.75/cwt 4) Operating expense
ratio lt 70
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15 Measures of Dairy Farm Competitiveness
(continued)
Capital Efficiency 5) Dairy investment per
cow lt 7,000/cow 6) Asset turnover ratio gt
0.60 Profitability 7) Net farm income gt 130,000
per owner/operator family 8) Rate of return on
farm assets gt Loan interest rates Liquidity 9)
Current ratio (assets/liabilities) 1.5 to 2.5
Working capital Positive and stable
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15 Measures of Dairy Farm Competitiveness
(continued)
Repayment Schedule 10) Scheduled debt payment
lt 15 of gross receipts
(principal, interest, and capital lease)
lt 500/cow Solvency 11) Debt to asset ratio lt
40 12) Debt per cow lt 2,500 if not
expanding lt 3,500 if expanding Mission 13)
Management team agrees on why they are in
business written mission statement
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15 Measures of Dairy Farm Competitiveness
(continued)
Maintain Familys Standard of Living 14) Family
living costs equal 10 to 15 of gross family
income Expand herd 60 every 10
years Motivated Work Force 15) Managers use
personnel management practices that lead to
well-trained, enthusiastic, empowered family
members and employees who share a commitment to
the mission and goals of the business.
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Ohios Dairy Industry

• Characteristics of farms leaving family labor,
  small, diversified, traditional
• Characteristics of farms growing large, profit
  oriented, one enterprise

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Ohio Dairy Industry

• OH IS a profitable place to produce milk
• Price of milk
• Feed costs
• Infrastructure
• DO WE HAVE THE PEOPLE and ENVIRONMENT?

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Population Change from 1980 to 2000
Decrease 1 to 10 11to 20 20 to 30 gt 30
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Infrastructure Issues

• Road repair and maintenance
• Minimizing odor
• Storage and land application of manure
• Water quantity and quality
• Property values
• Not in my backyard

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Environmental stewardship ...
down on the farm.
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Environmental Stewardship
AIR QUALITY
WATER QUALITY
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My farm?
Feed Storage
Animal Housing
Managing Resources
Manure Storage and Application
Parlor Wastes
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Change in Animal Concentration in 22 Years
1 (x 1000)2Excludes horses and poultry
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Being a Good Neighbor
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Current Issues

• Niche markets for milk
• Organic
• Milk from cows not supplemented with BST
• Raw milk
• Cost of production price for milk
• Environmental Assurance
• Animal Welfare
• Large versus small farms

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