California cows
April 21, 2016

Race to Get Bigger Slows

 |  By: Fran Howard

The family dairy farm still dominates other ownership structures in rural America, and the rate of growth in large dairies has increasingly slowed over the past 15 years.

More than 90% of all dairy farms are family farms and more than 90% of the nation’s milk is produced by family owned and operated farms, according to a recent report released by USDA’s Economic Research Service (ERS) titled Changing Structure, Financial Risk, and Government Policy for the U.S. Dairy Industry.  

“ERS defines a family farm as one whose principal operator, and people related to the principal operator, own more than 50% of the farm business,” says Mary Ledman, dairy economist with the Daily Dairy Report and president of Keough Ledman Associates Inc., Libertyville, Ill.

“Large dairies in the United States that are owned by a single family that owns multiple farms but relies on hired managers to operate the farms are not classified as family farms unless the hired managers are also family members,” Ledman further notes. Even in the largest herd-size category, family farms make up more than 90% of all operations.

“In 1992, there were more than 155,000 dairy operations in the United States and only 554 dairies had more than 1,000 cows. At that time, most—or 483—of the 1,000-plus operations were in the West,” Ledman notes. “In stark contrast, there were only 15 dairies with more than 1,000 head in the traditional milk-producing regions of the Upper Midwest and Northeast in 1992. By 2012, that number spiked to 472.”

The West still dominates in overall size of operations, but its share of large dairies is slipping. In 1992, the West accounted for 87% of all dairies with more than 1,000 cows, followed by the “other states” category, primarily the Southeast, with 10%. At that time, the traditional dairy states were home to only 3% of the nation’s large dairies, Ledman notes.

“Fast-forward 20 years and the West still dominates the large-scale dairy operations but to a lesser degree,” she says. In 2012, the West accounted for only 66% of all dairies with more than 1,000 head, while the traditional milk-producing states grew their share of 1,000-plus dairies to 26%.

“For all of the United States, the growth rate in large dairies has slowed in each succeeding five-year period since 1997,” Ledman says. The number of dairies with more than 1,000 cows increased by nearly 60% from 1992 to 1997, she notes, followed by a 42% growth rate in 2002, a 26% gain in 2007, and a 14% gain in 2012.

“The West and the traditional dairy regions experienced a deceleration in growth rates over the 20-year period, but the rate of growth varied tremendously between regions,” she says. “For example, the number of dairies with more than 1,000 cows in the West grew by 5.4% from 2007 to 2012, while dairies with more than 1,000 cows in the traditional states increased by 45% over the same period.”

Despite the more rapid growth rate in the traditional milk-producing states, the number of dairies with more than 1,000 head in these regions would have to increase nearly three-fold to match the number in the West, she adds.

 

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