ige 2-Keystone Farm Show Section 1, Lancaster Fanning, Saturday, January 2, 1999
Pai
Editor’s Note: At the Dairy Futures Conference held in State Col
lege in December, officials from all segments of the dairy industry
gathered to discuss the challenges to producers, processors, and
marketers of milk and dairy products. One of the keynote speakers
was Dr. Ken Bailey, from the University of Missouri. Here is the text
of his presentation.
Paper Presented at the 1998 Pennsylvania Dairy Futures Conference
December 17-18, State College, Pennsylvania
The outlook for the Pennsylvania dairy industry is both exciting and challenging
Pennsylvania has some of the leading counties in the U S in terms of milk production,
has a tradition in dairy farming going back to the colonial days, and has a strong
infrastructure Pennsylvania has a comparative advantage in milk production That’s
economics jargon for saying the state has a long-term advantage in milk production over
her neighbors
Clearly the objective of the dairy industry in Pennsylvania is to 1) maintain a family
structure in dairy production, 2) maintain a strong rural infrastructure for milk
production, transportation and processing, and 3) develop strong markets for dairy
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Pennsylvania’s Role In The Global Dairy Industry
By Dr Ken Bailey
Commercial Agriculture Program
University of Missouri
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products These are the fundamentals that have kept Pennsylvania a leader in the U S
dairy industry for many years
Pennsylvania dairy farmers need to reassess their position in the future U S dairy
industry This industry is changing rapidly In many ways it is no different that the
automotive, computer, or banking industries The U.S marketplace changes rapidly and
successful players need to understand these changes and profit from them. In the dairy
industry, these changes are well within the grasp of small dairy farm families in
Pennsylvania
There are tremendous opportunities for those dairy farmers that realize change is needed
and want to be successful in the new marketplace of the future Thus my message today
1 The free market is working; no need to fear the future
2 Let’s focus on the real problems in our industry
3 The outlook for milk and dairy products looks promising, and
4 Pennsylvania dairy farmers have a comparative advantage in milk production
Current Situation
The outlook for the dairy industry looks very promising at the moment. 1 Milk prices are
at record highs, and grain prices are very reasonable due to a global glut and reduced
demand in Asia The result is very high margins (difference between milk prices and
feed costs) for dairy farmers.
The reason for these high milk prices is supply and demand The supply of milk has been
tight this year due to lower production levels in the West (primarily California) due to
heavy spring rains and summer heat. Demand for cheese and butter has been very strong,
creating a strong demand for raw milk, especially the fat content of milk Thus strong
markets and limited supplies have resulted in record high prices for milk
(Turn to Pag* 3)
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