6 Summary

The Missouri dairy industry is poised to furnish dairy production managers with knowledge systems to capture available production and management technologies. This audit

Major observations and highlights in this audit are:

  1. Missouri ranked 17th in total milk production in the United States, 15th in the number of milk cows, and 41st in milk production per cow in 2000.
  2. The number of farms with milk cows in Missouri has dropped from 21,000 to 3,900 in the past 25 years. This is an 81% decline. At the beginning of 2001, there were 3,900 farms with dairy cows in Missouri, containing some 150,000 milking cows. These dairy cows provide $304 million in gross farm receipts to the families that operate those commercial farms.
  3. From 1970 until 1990, overall milk production remained relatively stable in Missouri. Missouri produced 3,012,000,000 pounds of milk in 1970 and 3,040,000,000 pounds of milk in 1990. By 2000, Missouri milk production declined to 2,258,000,000 pounds.
  4. The consumer population in Missouri grew from 4,677,623 in 1970 to 5,595,211 in 2000. Milk production and dairy product consumption were in balance in 1990. Milk production in Missouri has been declining rapidly since 1993, leading to a growing milk deficit, closure of dairy processing plants, fewer dairy farmers, and declining dairy infrastructure
  5. The major trends in the Missouri dairy industry between 1975 and 2000 were:
      a. The number of dairy cows decreased from 302,000 to 154,000.
      b. Milk production per cow increased from 9,404 pounds per cow to 14,662 pounds per cow.
  6. The top 10 dairy counties in Missouri accounted for one-half of the state's dairy cows in 2000. However, most of these counties rapidly expanded cow numbers in the 1970s and 1980s only to decline in cow numbers during the 1990s.
  7. During the 1980s, Missouri lost farms with dairy cows at a slightly slower rate than in the average in the United States. However, in the early 1990s, Missouri dairy farms declined at about the same rate as the United States and neighboring states.
  8. Milk production per cow continues to be low in Missouri's dairy industry. The U.S. average milk production per cow has grown by an average of 313 pounds per cow per year since 1975 while Missouri's average milk production per cow has increased an average of 210 pounds per cow per year. This reduced production equates to $15 per cow per year. Accumulated loss totals nearly $400 per cow in reduced income per year.
  9. Milk production in the United States has increased by almost 50% during the past 25 years. A slow compound growth in demand from population increases and slight increases in per capita consumption of dairy products have enabled some industry growth since 1975. Western growth states have increased dairy production to 350% of 1975 levels.
  10. Missouri's average annual milk production per cow was 14,662 pounds in 2000. That compares to the U.S. average milk production per cow of 18,204 pounds and California milk production per cow of 21,169 pounds.
  11. Missouri land values are significantly less than California, some northeast states, and the southeast dairy growth states while comparable to the upper midwest states.
  12. Missouri real estate tax rates are much lower than California, the northeast states, and the southeast states. Missouri has a distinct advantage in terms of lower real estate taxes.
  13. Dairy farm operations provide $304 million in gross farm receipts to farm operators. This income is reinvested in the farming communities by purchasing production inputs and payment of family living expenses. This reinvestment, or multiplier effect, sustains almost 4,500 jobs in the state and has an additional total economic impact of $210 million on Missouri's economy. The total combined impact of dairy farm operations on Missouri's economy is more than $514 million.
  14. Investment per cow in 1993 averaged $8,250 in the corn belt region and $2,944 in the Pacific region. Annual milk production per cow was also much higher in the Pacific region. The corn belt's feed cost per hundredweight of milk is $7.38 versus $6.47 for the Pacific region.
  15. Missouri is geographically located in both the Southeast Milk Marketing Order and the Central Milk Marketing Order. The Southeast Order has one of the highest fluid milk (Class I) utilizations in the nation. The Central Order has one of the lowest Class I utilizations in the country.
  16. The economic value to Missouri for increasing the average milk production per cow by 1,000 pounds is $35 million. This additional economic activity would generate an addition 370 jobs in the state.
  17. Each expansion of 100 cows that are added to Missouri's milking herd at the current level of production per cow will increase economic activity at least $343,000 and sustain almost four additional statewide jobs.

Opportunity exists for profitable dairy production in Missouri provided dairy managers use efficient scale and allocate resources efficiently. This audit classifies future Missouri dairy production systems into one of the following six systems:

The following tactics are suggested as practical ways that Missouri dairymen can determine what technology areas and complementing management techniques need to be incorporated into their existing operations.

We suggest a strategic plan to be developed by the Missouri dairy industry which should address the following questions to provide competitive opportunities for Missouri dairy producers:

  1. What actions are required to assist Missouri dairy farm managers to efficiently manage appropriate levels of technology?
  2. What actions are required to assist Missouri dairy farm managers to efficiently manage family and hired labor?
  3. How can the availability of capital be increased for current and entering dairy producers who demonstrate an ability to manage capital and labor efficiently?

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