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
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Minnesota's Dairy Crisis and You

Minnesota's dairy industry is in the midst of a quiet crisis. Here's how you can help turn it around.

We have bad news and good news.

The bad news: Minnesota's dairy industry is in the midst of a quiet crisis. The number of farms is declining. So is milk production and market share compared to other states. Minnesota producers lag in accepting innovation and adapting to the changing economic and social environment. State and local laws and policies create roadblocks to change. An uncertain future makes processors, suppliers, and other members of the dairy industry infrastructure increasingly reluctant to focus their resources in this state.

The good news? First, Minnesota has lots of things going for it, dairywise -- relatively inexpensive and good feed, abundant water, and committed families, to name just a few. Second, if they choose to, Minnesota dairy producers can turn the situation around. And if they do, it will benefit not only the producer, but ultimately the industry.

Those are some of the findings in A Roadmap to the Future: Minnesota Dairy Climate Study and Strategic Plan, a report prepared for the Minnesota Legislature by the Minnesota Department of Agriculture last spring. The report paints a sobering picture of the current status of Minnesota's dairy industry. At the same time, it also describes concrete changes that lawmakers, producers, and others can make to help Minnesota regain its reputation as one of the best dairy states in the nation.

The Challenges

According to the report, Minnesota's dairy industry faces five big challenges:

Competitive performance. Minnesota's best dairy producers are competitive in today's national market. However, many Minnesota producers are not. The reason? Outdated production and management practices.
Access to capital. Traditional financing methods are not sufficient to get Minnesota farms back on track.
Environmental regulation. Minnesota's environmental requirements are stricter than those of neighboring states. County and township rules add more layers of restriction and confusion.
Land use and zoning. Land use policies are difficult to deal with because they vary from one place to another and change over time. They also tend to favor nonfarm activities over livestock production.
Education and assistance. Dairy producers need help developing the management skills they'll need to survive in the years to come.

Action Plan

A Roadmap to the Future recommends three actions to revitalize Minnesota's dairy industry:

Support and promote reinvestment and modernization. Laws, policies, and educational programs must make it easier for Minnesota dairy producers to invest in and modernize their facilities.
Improve the environmental permitting process. Environmental laws and regulations should be consistent and clear. They should protect both the environment and the rights of producers, and reduce uncertainty by providing for review of proposed projects early in the game.
Educate. Educational programs should be developed to help dairy producers learn to manage their operations more profitably and effectively.

How You Can Help

What can you do about this? Longtime University of Minnesota animal science faculty member Joe Conlin, who wrote the MDA report, offers some suggestions.

Recognize that change is needed. If we want small family farms to survive, we must be willing to let new, more efficient ways of dairy farming exist alongside them. In other words, attitudes, management skills, and laws and policies must change to make it easier for farmers to adopt progressive ways of structuring and running their farms -- including expanding.

If you're a traditional dairy producer and you like it that way, you may think this is a bad idea. In reality, it's probably the best thing that could happen to you. Why? Because in Today's national market, we need progressive farms to help keep the state's dairy infrastructure from collapsing. If creameries, feed dealers, seed dealers, and others are to remain part of our rural communities, they need the reassurance these farms offer that dairy farming will remain a stable part of the state's economy. Making progressive farms part of the picture will make it easier, not harder, for traditional farms to survive.
Make your farm the best it can be. This doesn't necessarily mean getting bigger; it does mean getting better. Start by clearly stating your needs and goals, both financial and lifestyle. Next, determine what changes you have to make to meet those needs and goals. These will probably include becoming more efficient at what you do. And that will probably mean modernizing in some way.
Make your voice heard. Become aware of policies and regulations that put Minnesota's dairy industry at a competitive disadvantage. Lobby your elected officials to change them.
Be environmentally responsible. The more you can do to minimize your environmental impact, the less the perceived need for regulatory control.
Think outside the box. Don't limit yourself to solving problems the way your parents and grandparents did. You're operating in a different world, so you need different tools. Learn and apply new techniques to improve your productivity and control your costs. Adopt cost-effective technologies. Restructure your business system if necessary. Emphasize quality milk production.
Learn more. Conlin recommends that dairy farmers take time to read the report and understand what it will take to shape a brighter future for Minnesota's dairy industry. You can access A Roadmap to the Future (Minnesota Dairy Climate Study and Strategic Plan) as well as a shorter executive summary online at http://www.ansci.umn.edu/dairy.htm.

Facts and Stats

Dairy production and processing in Minnesota employs more than 22,000 workers.
Minnesota's share of the national dairy market declined from 8.3 percent in 1960 to 5.8 percent in 1999.
The number of dairy farms in Minnesota has dropped by more than a third since 1993.
The average herd size in Minnesota has grown 32 percent since 1993.
Cows on Minnesota's least profitable dairy farms (the low 20 percent) produce an average of 5,000 pounds of milk per year less than those on the most profitable farms.

Why Minnesota Needs Innovative Farms

Minnesotans strongly value the traditional family farm. However, because of competition from other states, these farms can no longer support the state's dairy infrastructure -- creameries, feed and seed dealers, and other suppliers -- on their own.

That doesn't mean we can't have traditional farms. What it does mean is that we need to intersperse them with "anchor" farms -- farms whose efficiency, management, production volume, and capital investment are at a level that can reassure dairy-related companies that they're here to stay.

Right now Minnesota's laws and policies tend to inhibit the development of these anchor farms. Many traditional dairy farmers think that's in their best interest. But it's not. If you want the milk truck to keep coming down your road, you need to support, not oppose, policy changes that make it easier for innovative farms to become part of the overall picture of dairying in the state.

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 9 Issue 2 Summer 2000