Keystone State must see dairy manufacturing as a growth industry worth investing in, plus create incentives to seed and feed it. By: John Vogel
During Ag Progress Days, I sat among some of the smartest people of Pennsylvania’s dairy industry to learn of phase one findings of the Pennsylvania dairy industry study — officially labeled the Study to Support Growth and Competitiveness of Pennsylvania’s Dairy Industry. Preliminary findings reported by Penn State Smeal College of Business’ Chuck Nicholson were depressing, but not surprising.
In brief, 14% of nearly 900 dairy farms surveyed don’t expect to exist by 2020 — just five years from now. Most of them were dairies with 150 cows or less. Cow numbers are expected to decline by 18%.
On the flip side, most dairies with 200 cows or more expect to be still trucking out milk in 2020. My only surprise, though, was the sketchy farm numbers from counties beyond Southeast Pennsylvania.
Performance factors most important were: 1) maximizing milk price per hundredweight; 2) stabilizing market price volatility; and 3) reducing production costs. Increasing production per cow and herd size were perceived as least important.
Trouble is, Pennsylvania’s problem is not about milk production; it’s about the lack of industrial development incentives. Giving milk away to food banks isn’t market development. Neither is “Drink milk; it’s good for you.” Sorry, milk promoters.
The commonwealth has failed to create adequate business incentives to grow processing and manufacturing to compete with the vibrant industries light-years ahead in New York and Wisconsin. Wisconsin has three times as much cheese and ice cream production as Pennsylvania, according to Nicholson. New York also has aggressively courted cheese and yogurt industries plus processed products with incentives. Meanwhile, Pennsylvania still bottles most of its milk, but ships 30% to 40% or more to other states. Percentages vary according to how sources define processors.
Dairy exports from the port of Philadelphia are negligible compared to those of New York and Norfolk, noted Nicholson. PhilaPort is comparably non-competitive.
My viewpoint leaks in
Pennsylvania has long been plagued with nearsighted state economic development administrators who failed to see ag processing and manufacturing as a potential growth industry. That’s why any change must begin with the governor’s office and the legislature.
Agriculture still must prove it’s worthy of investing tax dollars for the future. Doing so will naturally bring benefits to other ag commodities. To grow any industry, you must seed it and feed it.
My first exposure to the myopic “hope and pray” mentality was when Pennsylvania Farm Link pursued bond funding to help establish young and beginning farmers. Pennsylvania’s economic development officials were clueless. Thanks to former ag secretary and previous state House Majority Leader extraordinaire Sam Hayes, we turned that corner. Today, the Keystone State has a number of low-cost investment vehicles for young farmers.
The commonwealth must develop aggressive business incentives to draw dairy processors and manufacturers. That must to go hand in hand with research and development of innovative value-added products. Industry either grows fueled by innovation or declines. That’s reality. There’s no status quo.
One innovation that — in my opinion — must be developed is the combination of low-heat milk pasteurization coupled with ultraviolet light technology. UV technology, developed by GEA nearly 10 years ago, kills bacteria without affecting healthful proteins and enzymes that help human systems break down lactose. It makes milk healthier — a huge leap away from “ultra-cooked” pasteurization.
So now what
During mid-September, farmers are hearing more about phase two of the study from Nicholson, Cornell University’s Andy Novakovic and University of Wisconsin’s Mark Stevenson — three of the nation’s top dairy analysts. Hopefully, they can shed more light on how Pennsylvania can brighten its dairy future.
The study, also involving New York, Michigan and Wisconsin dairy industries, has multiple components focusing on milk production, processing, marketing and policy. Results of the processor survey are to be shared Oct. 6 at a special session during World Dairy Expo.
As Nicholson pointed out at the APD meeting’s outset: “We’ll look at opportunities for growth. But opportunities are different than realities.”
Realities often must be overcome via incentives to create opportunities.
Source: American Agriculturist