UNIVERSITY PARK (Cenire Co.) Changes in dairy produc tion technology and rising produc tion costs present Pennsylvania dairy farmers with an ultimatum for the future: get bigger, or get out of the business, says an agri cultural economist in Penn State’s College of Agricultural Sciences. “Dairy farming is Pennsylvani a’s leading agricultural industry,” said Milton Hallberg, professor of agricultural economics. “The state’s 12,000 dairy farms have milk, dairy beef, and veal sales of $1.5 to $1.6 billion annually that’s 44 to 45 percent of total cash receipts of farmers in Pen nsylvania. But developments in dairy technology and policy over the past several decades are conti nuing to put pressure on the state’s producers. ‘The push to get bigger or get out is by no means a new phe nomenon it’s a process that began 20 years ago,” he said. “But it does highlight a continuing challenge facing Pennsylvania dairy farmers.” Relatively small dairy farms, ALUMINUM GRAIN BODIES & ALUMINUM REPAIRS by <4? <s* These ultra-light bodies are designed for strength through engineering, not strength with bulk For example, a 16* grain body with tailgate and 4 P sides weighs only 149 f» ihe ~~—- you any length or any side height up to 60". • Double swinging hay • Diamond flooring hauling tailgate • Pull out panel tailgates • Barn door type tailgate • Any size grain chute • Slide out cattle chutes HEWEY WELDING Box 2312, RD4 Lebanon, PA 17042 (717) 867-5222 Changes Challenge Small Dairy Farms like most in Pennsylvania, are fairly efficient, Hallberg said. “But declining milk prices, over production, global agricultural trade liberalization and new tech nologies like bovine somatotropin may force farmers to expand then operations. As income per cow falls, many Pennsylvania dairy farms will need to get larger just to maintain enough income to sup port a family.” Forty-nine percent of the state’s dairy farms have herds of 49 cows or less. “This small herd size enables farmers to save money on labor since they don’t have to hire as many workers from off the farm,” he said. “But rising produc tion costs may overwhelm any savings in labor costs.” In 1991, the average Pennsylva nia cow produced 14,800 pounds of milk and generated $1,954 of milk sales at the 1991 price of $13.20 per cwt Using those fig ures, the average 50 cow herd generated $97,680 in gross sales annually. “That may sound like a lot of money,” Hallberg said. “But ivailabie; annual cash costs of milk produc tion total $1,600 per cow. When you subtract those costs, it slashes net cash income from milk sales to just $17,680. Even if the farm earns another $lO,OOO to $12,000 in dairy beef and veal sales, that’s a modest income for a family of three or four,” Expansion, even when possible, is expensive. “Capital investment per cow has risen from near $2,000 per cow in the 1960 s and 1970 s to over $7,000 per cow today,” Hallberg said. “That high investment cost suggests that increasing the size of the opera tion won’t be easy, even if physi cal resources like land and labor are available. Some small produc ers will likely leave dairy farming.” Among other things, expansion requires more farm labor. “The relatively small size of Pennsylva nia dairy farms allows the farm We’ll build Round benefi for you and y WE CUSTOM DESIGN SYSTEMS FOR YOU KEEP YOUR COOL! Spray proof AMD high performance agricultural coiling fans. THE FIRST COMPLETE LINE OF HI-PERFORMANCE AGRICULTURAL CEIUNG FANS'' Receive Tear- livestock w/ Schaeffer Bam Koole: SCHAEFER 'Vent/fatfon Fqt/fpmwu 7IPRMAN | * AIR-O-MATIC f Wall Fans * Wall Fan w/Hood & Painted Galvanized Cabinets Sizes 20” to 48” Available ftA. Cedar Crest Equipment Two Convenient Locations family to provide most labor,” Hallberg said. “This can be an advantage because the farm’s pro duction costs aren’t greatly affected by off-farm wages and the farmer doesn’t need to worry about hiring reliable labor from off the farm. That will change as dairy farms get larger.” Some of the cows and perhaps some of the land from these small er dairy farms will be purchased by those who stay in the business and expand their operations. Hall berg said. But some of the cows will not need to be kept in milk production as technological inno vations lead to increased milk out put per cow. The economic importance of Pennsylvania’s dairy industry does not stop at the farm gate. “Farmers buy feed, seed, fertiliz er, machines, buildings, milking equipment and veterinary ser vices, which generates secondary 608 Evergreen Rd. Lebanon, PA 17042 (717) 270-6600 economic activity.” Hallberg said. “Milk processors and bottlers also generate considerable value and employ a sizable workforce,” he said. “In 1987, processors added $6OO million to the value of milk and other inputs and employ ed nearly 8,000 people who earned $lBO million in salaries and wages. If the local dairy industry fails, the processors, bot tlers and other related businesses in that area soon will follow.” LEASANTAIRE WALL FANS A Outside View RD 2 BOX 271 East Earl, PA 17519 (717) 354-0584 CANARM
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