Dairying in 2020
In a face-to-face discussion session of our Farm Credit University online ag lending training class, three students from the East Coast asked about the future of the dairy industry. Will it be 200, 500, or 1000-cow dairies? What will be the biggest challenges? Will there be room for the small farm?
First, I tend to agree with Dr. Ed LaDue of Cornell University. His assessment states that the current number of dairies, which is 80,000 plus, will be reduced to under 20,000 within 15 years. That being said, west of the Mississippi River will be the 1,000 to 5,000-cow units operating around the clock with specialized feed, calf and heifer raising and astute enterprise analysis of which business components are making and losing money.
Many operations will be financed by the wealth of existing dairies as they liquidate because of development pressures and relocate to other regions. These operations will be co-owned by bright production business managers, some being the current Hispanic managers and employees. Location isolation because of odor, water and environmental challenges will be common.
In the rest of the nation, there will be pockets of larger dairies surrounded by smaller 50- to 200-cow operations, which I call “old school operations.” They will survive and prosper because of low debt, unique marketing opportunities or practices based upon religious or cultural beliefs.
The top five challenges to any size dairy, in no particular order, will be:
- Environmental, water and natural resource management
- Managing people and productive relationships
- Managing information and education
- Public, political and media concerns
- Consumer taste and preference changes
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Editors' note: Dave Kohl, The Corn and Soybean Digest Trends Editor, is an ag economist specializing in business management and ag finance. He recently retired from Virginia Tech, but continues to conduct applied research and travel extensively in the U.S. and Canada, teaching ag and banking seminars and speaking to producer and agribusiness groups.
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