Dairy Initiatives

Dairy

Department of Animal Science

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Dairy Cows Are Rural Economic Development Engines

by JOE CONLIN
Quality Dairy Management Services

More dairy cows on the Minnesota landscape will help revitalize Minnesota rural communities. A recent University of Wisconsin study shows each cow generates $13,737 of economic activity. A 1993 Minnesota study estimated the impact of one cow to be $11,671. This money ripples through the community in the form of jobs, goods, and services created by a cow. Each cow paid $604 in state and local taxes in the Minnesota study and $512 in the Wisconsin study. These estimates are in close agreement given that 10 years separated the time of the studies.

Many people in local rural communities benefit from the ripple effect. The farm family benefits from milk and animal sales. Providers of goods and services benefit from sales to the farm. Processors add large value to milk products and employ many workers. These two dairy sectors create added business activity in the local community. Some of the statewide businesses benefiting from the cow include retail and wholesale trade, restaurant/bar, personal services, medical services, banking, insurance, electrical services, housing, and real estate.

Cows generate jobs. Every nine cows supported one job in the recent Wisconsin study. The number of jobs supported by the Minnesota dairy industry surpasses the combined employment of 3M, Target, and Northwest Airlines. A 1999 study showed the Minnesota dairy industry supported 53,595 jobs. The industry employed 44,529 people in dairy production, processing, marketing, and supply sectors. This created another 9,347 jobs through local spending. Dairy ranks fourth for employment in Minnesota's manufacturing industries.

The dairy industry adds $600 million in value to Minnesota's crops each year. Minnesota cows convert about 60 million bushels of corn, 5.5 million tons of corn silage, 2.4 million tons of hay, and 400,000 tons of high-protein feed to the higher-value product of milk. In times of normal prices, the added value benefit of each $1 of feed converts to $3.68 in value of milk. The value of each $2.60 bushel of corn contributes $9.57 to the economic base of the community when marketed as milk.

Every 1,000 dairy cows within a community contribute approximately $2.7 million in farm income, employ 12 people, and use 1,224 acres of corn and 621 acres of hay. Raising replacements in the community would increase this contribution by $1 million. The purchased services for 1,000 animals would add $65,550 in veterinary and breeding, $167,232 in interest, $63,835 in supplies, $58,650 in utilities, $57,600 in taxes and insurance, and $342,985 in wages.

Cows encourage diversity in cropping systems through hay or cover forage crops and sustainable crop rotations. Among domestic animals, cows are the most efficient converters of these crops to high-quality food products. Hay crops provide protection to easily eroded soils that are found in many areas of the state. Good manure and nutrient management programs use manure as a crop nutrient resource to minimize pollution risks and sustain soil fertility and structure, reducing dependence on commercial fertilizers. The dairy industry is based on use of renewable resources and therefore is one of the state's most sustainable economic engines.

Potential Economic Impact of a Modern Dairy in Minnesota

*Industrial output = total economic activity generated for the farm, the rural communities, and the state where the farm resides.

Source: Rethinking Dairyland: Background for Decisions About Wisconsin's Dairy Industry. Marketing and Policy Briefing Paper No. 78A, May 2002, University of Wisconsin.

Adapted with permission by Joe Conlin, Quality Dairy Management Services, 651-484-4776.

D A I R Y    I n i t i a t i v e s    N E W S L E T T E R
Volume 12    Issue 1    Spring 2003