Shrinking Farms, Expanding Demand Characterize Dairy

April 24, 2000

Fewer and larger farms with a steadily increasing demand for products characterize the dairy industry. Milk production for 1970-99 increased 39%, from 117 billion pounds in 1970 to 163 billion in 1999. Commercial use of milk increased 33%, from 119 billion pounds in 1980 to 160 billion in 1998. Farm prices, however, remain on a down trend.

The National Milk Producers Federation reports that during the 1970s and first half of the 1980s, when government support for dairy farmers increased each year, milk production expanded at an annual rate of 1-5%; when support prices were reduced in the late 1980s and through most of the 1990s, milk production increased in a more narrow range – between 0-2%.

More competitive markets meant regional changes in milk production. Milk production has shifted to less traditional regions. From 1970-99, 17% of the nation’s milk production moved from the Upper Midwest, Northeast and Corn Belt regions to the Southern Plains, Mountain and Pacific regions. California, Idaho, Washington State, Arizona, New Mexico and Texas had above-average gains in production.

Since 1970, milk production in those states has increased more than 100%, according to the NMPF’s U.S. Dairy Markets & Outlook.

Population growth each year "generally results in an increase in total consumption of dairy products," says the report. Per capita consumption has increased from 523 pounds in 1980 to 592 pounds in 1998. "On average, total dairy demand has been growing at about 1% annually," says the report. Cheese leads all dairy productions with consumption increases that averaged 3% over the same time period.

Structural changes for dairy farming concern cost efficiency from technological advancements in genetics, nutrition and herd management, the report continues. Large farms have higher rates of technology adoption that smaller farms, so larger farms have higher per-cow productivity than smaller farms. "These trends are reflected in the disproportionate contribution of larger farms to total milk production," the report says.

The entire report is available on the Internet at http://www.nmpf.org/nmpf/meData/.