While findings from the 2017 Census of Agriculture will not be released for quite some time, the annual count of licensed dairy operations contained in the February Milk Production report from USDA offers a sneak peek at how many dairy producers have left the business since 2012.

The average number of U.S. dairy farms licensed to sell milk has fallen every year since the data series began in 2003, and the 3.8 percent national decline registered in 2017 matches the average reduction from 2005 to 2016. But not all states are experiencing the same rate of exodus.

The top 20 states in terms of 2017 milk production are home to 86 percent of the nation’s 40,219 licensed dairies, and 15 of those states recorded a decline in licensed operations last year. None of the top 20 states have registered a growth in farm numbers since Arizona in 2015.

Many factors are at play when considering why some states have lost a larger percentage of operations than others in recent years. It is interesting to compare changes in the three years since the Margin Protection Program for Dairy Producers (MPP-Dairy) began operating in 2014 with the previous three-year period.

For the U.S. as a whole, 10.2 percent of licensed operations ceased to exist in 2017 relative to 2014, a slower rate of decline than the 12.6 percent drop from 2011 to 2014. Of the top 20 states, 13 posted slower rates of decline since MPP-Dairy versus 2011 to 2014, with Texas (-9.1 percent versus -25.4) and South Dakota (-11.8 percent versus -27.1) recording the largest improvement in terms of percent of licensed operations exiting the industry.

Of the seven states in the top 20 that saw faster rates of decline in licensed operations since MPP-Dairy began operating, Washington (-6.3 percent versus +2.1) and Florida (-15.4 percent versus -7.1) posted the largest negative changes, followed by New Mexico, Ohio, and New York.

Five of the seven states that saw accelerated operation number declines since MPP-Dairy also experienced lower state All-Milk prices as compared to the U.S. All-Milk price from 2014 to 2017 versus 2010 to 2013. Michigan (-$1.31), Ohio (-$0.63), New Mexico (-$0.30), New York (-$0.15), and Florida (-$0.11) all saw their state All-Milk prices deteriorate relative to the U.S. price in recent years.

As industry participants continue the process of crafting the dairy safety net to be included in the next farm bill, keeping dairy operations financially viable remains a top goal. While the detailed size of operation data gathered in the 2017 Census of Agriculture will not be available for some time yet, using available data on licensed operation reductions by state provides one more piece of information to those tasked with developing future policy.

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(c) Hoard's Dairyman Intel 2018
March 12, 2018
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