2008 Wisconsin Dairy Modernization Survey

Dairy March 06, 2012 Print Friendly and PDF

Abstract

A survey was conducted on 99 Wisconsin dairy farms representing 30 counties that had recently modernized their dairy facilities. The majority of the farms surveyed had switched from milking cows in a stall barn to some type of parlor milking system. The survey was used to determine the producers' observations as to the major benefits to both themselves and the cows after modernizing their facilities. Producers were also asked to identify the educational resources they utilized and valued the most in their planning process; their most challenging aspect of the modernization process; the grant and loan programs they used, and what they would change if they could do it over again.

The changes in daily labor requirements as a result of modernizing dairy facilities were gathered through the survey. Daily labor needs on a per cow basis for milking setup and cleanup, stall maintenance, feeding, and handling cows and manure were calculated for pre- and post-modernization. Milking throughputs based on the number of cows milked per person per hour were calculated from the survey data. The economic impacts on milk production per cow and per farm after modernizing were also gathered and are summarized in this paper.

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Introduction

In 2008, approximately 80% of the dairy herds in Wisconsin still had herd sizes of less than 100 cows. The majority of these herds were milked and housed in the traditional stall barns, many of which were built in the early 1900s with stall dimensions for cows that were much smaller and that produced about one-fifth of the milk that today’s cows produce.

Most Wisconsin dairy producers simply added length onto their two-story traditional stall barns as they increased their herd size during the 1940s, 1950s, and 1960s. In the 1970s and 1980s, many dairy farms increased their barn size by adding on single-story additions as silos replaced much of the need for additional hay mow space in the stanchion barns. These early dairy barn expansions are easy to spot as you drive around the Wisconsin landscape and see many barns with two to three different roof lines reflecting the different eras of modernization in the state.

The transition from the stall barn housing and milking system to a freestall housing and parlor milking system has been occurring on Wisconsin farms over the past 20 years. However, the adoption of milking parlors on smaller family dairy farms has been fairly slow due to the large costs involved with building a new parlor and freestall system and having to spread those costs over a small number of cows. The average herd size in Wisconsin has grown steadily and stood at 93 cows in 2008.

Over the past 20 years, many dairy producers reached a crossroads and were forced into deciding the direction they wanted their operation to take. Their options usually included remodeling the present barn and adding a few more stalls; moving the cattle out of the traditional barn and into a new freestall barn and parlor at a new location; building a new freestall barn and some type of retrofit parlor inside their present stall barn; or avoiding any new investment in their facilities and exiting the dairy business.

Many producers did choose to exit the dairy business as we saw a steady decline in Wisconsin dairy cow numbers from 1,876,000 in 1985 to a record low of 1,233,000 in 2005. The number of dairy farms in the state also dropped from 41,000 in 1895 to a record low of 13,525 in November of 2008. This dramatic decrease in dairy farms, milk cows, and milk production led to shortages of milk for cheese plants in many parts of the state in the early 1990s.

Fortunately for the Wisconsin dairy industry, many dairy farms also found the option of modernizing their facilities as a viable one in meeting their future goals. Many family-run dairies wanted to reduce their labor requirements for feeding and milking and improve production per cow. They also sought to increase cow comfort by moving cows to a freestall barn. The concept of retrofit and lower cost parlors allowed many producers of average-sized herds to modernize and expand cow numbers in moderate steps.

Methodology

The UW-Extension Dairy Team conducted a survey in 2008 of Wisconsin producers who had modernized their dairy facilities within the past 10 years. UW-Extension agriculture agents assisted in identifying farms and collecting the surveys from 104 dairy producers who had modernized their facilities. The farms were not chosen at random, and many had received assistance from UW-Extension in their modernization process. Dairies from 30 counties are represented in the survey. Survey data were edited for practical errors and then entered by the University of Wisconsin-River Falls Survey Lab. After editing, 99 of the 104 surveys were included in the final data set that is summarized in this paper.

The survey was conducted to determine what the producers observed as being the major benefits to modernizing from the perspective of both the cows and their personal standpoint. Data were collected to determine the types of educational resources and dairy professionals that farmers used and valued the most in the process. They were also asked to identify these factors:

  • the most challenging part of their modernization process;
  • the programs they used to help finance their project; and
  • what they would change in their project if they could do it over again.

The survey asked producers to compare their time spent on labor for feeding cows, milking setup, stall maintenance, and manure handling prior to modernization with their labor needs after modernization. Producers were also asked to record their costs for modernization, and all investment figures were adjusted to represent 2008 dollar values.

Survey Results: General Farm Information

The average herd size in the survey was 82 milk cows prior to doing a modernization and 203 cows after modernizing. The herd sizes after modernization ranged from 15 cows on a herd that had just started up, to the largest herd that is now milking 865 cows. The survey included 14 operations that utilized some grazing and 85 confinement operations.

General information for the surveyed farms including average herd size, production per cow, and acres owned and rented for pre- and post-modernization are included in Table 1 below. The average herd size increased by 148% after modernization; however, the full-time equivalents (F.T.E.) for dairy labor only increased by 84.6% after modernization. Gains in labor efficiency after modernizing their dairy facilities were also observed by the increase from 35 to 50 milk cows per F.T.E.

 

Table 1. General Farm Information

General Farm Information

Pre-Modernization

Post-Modernization

Herd Size (Milk Cows)

82

203

Average Milk Production /Cow

19,601 lb

20,941 lb

Acres of Land Owned

351

421

Acres of Land Rented

187

308

Acres/Cow (Owned & Rented)

6.56

3.59

Dairy Full-Time Labor Equivalents

2.34

4.32

Milk Cows per F.T.E.

35

50

The survey showed that many dairy producers chose to rent additional land when expanding their herd and modernizing. The number of acres owned and rented per cow was reduced by 45.3% after modernization. This is not surprising given the high cost of land and limited capital available while undertaking a modernization project. The reduction in land base per cow after modernization was mainly offset by renting more acres versus purchasing more land.

Milking Systems

Seven of the farms reported that they had built alternative housing facilities for the milk cows, but they were still milking the cows in their old stall barn. The other 92 farms reported that they had built some type of parlor to milk cows in. Sixty-two percent of the farms built retrofit parlors into existing facilities, and 38% constructed their parlor in a new building. Parabone and parallel parlors were the most popular stall types used on the farms. Herringbone, flat, and rotary parlors were also used on the farms. Figure 1 contains a complete breakdown of parlor stall types included in the study.

Figure 1. Types of Parlor Stalls Represented on Surveyed Farms

 

The parlors in the study had an average of 13.7 milking units. Sixty percent of the producers reported using new stalls, 28% used home-built stalls, and 12% used a combination of new and used milking stalls when building their parlor.

The average time period for the farms to convert from their stall barn system to parlor milking system was 17 weeks. This period was defined as the time from the start of parlor construction to the first milking in the new parlor. There was a wide range in the time periods for the conversion ranging from as little as 4 weeks to as long as 26 months. See Figure 2 for the complete summary of all the times reported. The producers were also asked how much of their own labor they provided in building their new parlor. The farms averaged 37% of the labor being provided by the producer and 63% being provided by a professional contractor.

Figure 2. Parlor Construction Time

 

Producers were asked to report the cost of building their new parlors and the year they were built. The parlor costs were then converted to 2008 dollars to allow for an accurate comparison between parlor types based on a per stall basis. The cost breakdowns were also separated for parlors constructed inside a new building from the retrofit parlors that were built into existing stall barns or other buildings. Parabone parlors were the most popular choice for retrofit parlors, and parallel parlors were the most popular in new construction scenarios. Flat parlors built inside existing facilities were the lowest cost at $3,360 per stall, with parabone parlors having an average cost of $3,845 per stall. The highest average per stall cost for parlors in the survey was a parallel parlor built into new construction at an average cost of $22,361 per stall. See Table 2 for the average per stall costs of all the parlors in the survey.

 

Table 2. Average Parlor Cost per Stall

Parlor Stall Type

Retrofit Construction

(n=55)

New Construction

(n=34)

Flat barn

$3,360 (n=6)

NA

Herringbone

$9,657 (n=8)

$18,769 (n=3)

Parabone

$3,845 (n=30)

$6,016 (n=10)

Parallel

$7,478 (n=11)

$22,361 (n=18)

Cost per stall for retrofit parlors was about half the cost of parlors built into new construction. The lower cost for retrofits results from lower building shell and milk equipment costs. Farmers also provided more of their own labor in building the retrofit parlors than those who built with new construction, helping to further lower the cost for retrofits. Producers who built retrofit parlors reported providing an average of 44.8% of the labor toward building their parlor, while those who built with new construction contributed an average of 23.8% of the labor.

Milk Cow Housing and Feeding Systems

Seventy-nine percent of the dairies surveyed housed their milk cows in freestall barns, 17% housed their milk cows in bedded pack barns, and 4% were using compost bedded pack barns. Fifty-nine percent of the dry cows were in bedded pack housing, 40% were housed in freestalls, and 1% was housed in compost bedded pack buildings.

Portable TMR mixers were used on 83% of the farms, 4% used stationary TMRs, 8% of the farms used mechanical bunk feeders, and 14% of the farms reported the use of some managed intensive grazing in their feeding systems. Cows were fed an average of 1.46 times each day in the winter and fed only a slightly higher average of 1.57 times daily in the summer. Farmers reported pushing feed up to the cows an average of 3.51 times per day. Silo bags and upright silos were both used for feed storage on 66% of the farms. Bunkers were used on 35% of the farms, and 34% of the surveyed farms used wrapped bales.

Manure Handling, Storage, and Bedding

The most popular system for handling manure was to use skid steers and tractor scraping, with 88% of the farms reporting using them. Eleven percent of the farms used automatic scrapers, 1% reported using a flush system, and 8% reported using some other type of system for handling manure including grazing, barn cleaners, slated floors, and composting. The total percentages for handling and storing manure exceed 100% because many farms reported using multiple methods for each on their farm.

Fifty-two percent of the farms reported having a manure storage structure that held more than a 60-day supply. Concrete manure storage structures were the most common, with 47% of the farms reporting their use. Twenty-six percent of the farms used earthen/clay-lined manure storage pits, and 4% used synthetic liners in their storage pits. Thirty-one percent reported having a manure storage capacity of two to 60 days on the farm, and 29% reported that they hauled manure daily.

Sand was the most popular type of bedding used for milk cows and was utilized by 52% of the farms. Mattresses were used on 27% of the farms, 19% used traditional bedded packs, and 4% housed cows on compost bedded packs. These percentages do not equal 100 because several farms reported using a combination of bedding types.

The 99 farms surveyed reported a total economic investment of over $65.3 million (2008 dollars) into modernizing their dairy facilities. That is an average investment of $659,671 per farm and $3,250 per cow. The investments include expenditures for modernizing calf, heifer, milk cow and dry cow housing, milking parlors, manure and feed storage, and handling systems for feed and manure. The investments in modernizing milking parlors and milk cow housing represented 73% of the total amount invested for modernization on the surveyed farms.

Labor Impacts

The survey asked producers to compare their labor requirements prior to modernizing facilities with the labor needs after modernization. Producers listed the amount of time they spent daily for milking, milking setup and cleanup, feeding milk cows, cleaning and bedding stalls, handling cows, and handling manure. Table 3 illustrates the average time reported for each of these daily chores. Note that the pre-modernization numbers are for an average herd size of 82 cows, and the post-modernization numbers represent the daily labor requirements for an average herd size of 203 cows.

Table 3. Pre- and Post-Modernization Daily Labor Requirement for Entire Herd

Average Total Time Spent Each Day on Chores

Pre- Modernization

Average for 82 Cows

Post- Modernization

Average for 203 Cows

(Daily hours for herd)

(Daily hours for herd)

For Each Milking1

2.58

2.88

Milking Setup/Cleanup

0.57

0.73

Feeding Milk Cows

2.04

1.86

Cleaning/Bedding Stalls

1.08

1.17

Collecting/Handling Manure

.98

1.31

Handling Cows2

1.14

1.83

1 Defined as the time from pump on to pump off.
2 Includes time for breeding, treating, and moving cows.

 

The numbers in Table 3 illustrate that producers were able to milk almost 2.5 times more cows without adding a lot of additional labor. The top personal benefit reported in the survey by producers was the reduction of labor per cow. These labor savings on a per cow basis allowed producers to expand cow numbers to help pay for their modernization project without having to hire a great deal of additional off-farm labor. The real labor savings were seen on a per cow basis that is illustrated in Figures 3 and 4. The labor savings on a per cow basis were statistically significant for feeding, milking, cow handling, milking setup and cleanup, stall maintenance, and handling manure. These statistics are summarized in Table 4.

The labor reductions observed on the farms on a per cow basis after modernization were significant. The reduction in labor per cow for feeding and handling cows, milking setup/cleanup, milking, maintaining stalls, and handling manure totaled of 25.8 hours per cow per year on the surveyed farms. The annual per cow hourly labor savings are listed in Table 5 along with the economic impact of the labor savings based on labor at $12/hour for each farm.

Figure 3. Average Labor/Cow/Day for Feeding, Handling Cows, and Handling Manure

 

Figure 4. Labor/Cow/Day for Milking, Stall Maintenance, and Milking Setup/Cleanup

 

Table 4. Average per Cow Daily Labor Time in Minutes

Chore

n

Pre-Modernization Mean

Post-Modernization Mean

Time Change Cow/Day

Pooled Standard Deviation

Milking Setup/Cleanup

90

0.51

0.32

* 0.19

0.39

Milking

90

4.07

2.09

** 1.98

1.56

Feeding Milk Cows

44

1.59

0.65

**0 .94

0.70

Handling Cows

89

0.72

0.49

* 0.26

0.56

Maintaining Stalls

89

0.80

0.32

** 0.48

0.38

Handling Manure

83

.79

.40

** .39

.46

**P=<.001 *P=<.01

 

 

 

Total: 4.24 min/cow/day

 

 

Table 5. Annual Labor Reductions per Cow and Economic Savings for Surveyed Farms

Chore

Reduced Time Per Cow/Day

Reduced Hours Per Cow/Year

Labor Rate

Dollar Savings of Labor Reduction

Milking Setup/Cleanup

0.19

1.16

$12

$13.92

Milking

1.98

12.05

$12

$144.60

Feeding Milk Cows

0.94

5.72

$12

$68.64

Handling Cows

0.26

1.58

$12

$18.96

Maintaining Stalls

0.48

2.92

$12

$35.04

Handling Manure

.39

2.37

$12

$28.44

Totals:

4.24 min/day

25.80 hours

 

$309.60/Cow/Yr

 

The average farm reported reducing its per cow labor by 25.8 hours per year with almost half of those savings coming from reduced labor for milking. If labor is valued at $12/hour, the per cow labor reductions accounted for an average savings of $309.60 per year. If we took the final average herd size of 203 cows from the surveyed farms, that would equate to a total annual labor savings of $62,848.80 (203 cows x $309.60= $62,848.80) for the average farm in the study.

If we took the per cow labor numbers from Table 5 and applied them to a 100-cow herd, that herd would save 2,580 hours of labor, which would equate to approximately one full-time laborer. Thus, the per cow labor reductions that result from modernizing facilities could allow producers to expand their herd size by approximately 100 cows without having to hire additional off-farm labor.

The 92 dairies that switched from a stall barn to some type of parlor milking system reported milking an average of 22.7 cows/hour/person prior to modernization. After modernizing with a parlor milking system, the farms reported milking an average of 44.1 cows/hour/person across all the farms. The numbers of cows milked per person per hour increased by 21.4 after modernization. This number was statistically significant at a P value of 0.000. Parlor types in the survey included flat, parabone (swing), parallel, herringbone, and rotary, resulting in a large range of cows milked/person/hour.

The range of cows milked/person/hour after modernization ranged from a low of 21.1 cows in a double 12 parallel parlor that was achieving less than two turns per hour, to a high of 108 cows milked/person/hour in a double 16 parallel parlor that was achieving a little over five turns per hour. These numbers illustrate that the efficiency of the parlor operators has more to do with cow throughput per hour than does the type of parlor used.

The frequencies of parlor outputs from the study are represented in Figure 5. The number of cows milked/person/hour prior to modernization ranged from a low of seven cows on a farm milking 85 cows in two different stall barns to a high of 50 cows/person/hour on a farm milking 260 cows in a double 8 parallel parlor that was later expanded to a double 10.

Figure 5. Frequency of Milking System Throughput for Pre- and Post-Modernization

Cow Benefits from Modernization

Producers were asked to identify the cow benefits that they observed as a result of their modernization projects and then were asked to rank the importance of each identified cow benefit. This was done on a scale of 1 to 6 with a score of 1 being the lowest and 6 being judged the most important benefit. The highest reported benefit to the cows from modernizing was the improvement of overall cow health, which was observed on 85% of the farms. Fewer feet and leg problems were listed as the second highest benefit to the cows, followed in order by lower somatic cell counts, increased production, lower culling rate, and increased conception rates. The complete results of the cow benefits observed and the importance the producers placed on each are shown in Figures 6 and 7.

Figure 6. Cow Benefits Observed by Producers from Modernization Projects

 

Figure 7. Producers' Ranking of Importance of Benefits to Cows

People Benefits Observed from Modernization

The reduction in labor per cow was listed as the number one personal benefit that the producers gained from modernizing their facilities, with 96% of the producers reporting it on the survey. Improved working conditions and safety for workers were listed as the next highest observed benefits. These were followed in order by allowing the business to continue, increased profitability, providing entry for the next generation, and increased family time.

While the reduction in labor per cow was the most reported people benefit on the farms, it only ranked as the fifth most important benefit to farmers. When asked to rank the benefits observed for people, producers had improved working conditions and improved health and safety for workers ranked as the most important to them. Improved working conditions received a score of 5.26 out of 6, and improved health and safety for workers scored a 5.16. All of the responses regarding the most observed people benefits are shown in Figure 8, and the producers' ranking of the importance of each benefit to them is summarized in Figure 9.

Figure 8. People Benefits Observed by Producers after Modernization

 

Figure 9. Producers' Ranking of Benefits to People after Modernization

Educational Resources Used by Producers for Modernization

The survey asked producers to identify the educational resources they used in designing their dairy modernization projects. The most popular educational resource used by producers was touring and visiting other farms, with 99% stating that they had done so. Eighty-six percent of the producers reported using farm visits and seminars conducted by UW-Extension. Other educational resources used by producers are included in Figure 10 below.

Figure 10. Percentage of Producers Reporting the Use of Educational Resources

When asked which educational resources they found most helpful, the producers ranked visiting other farms the highest with a score of 5.48 out of 6. This confirms that even though freestall buildings and parlors are not a new concept, they are still new to those who do not have them, and farmers highly value organized tours to other farms that have modernized.

The producers also ranked farm visits by UW-Extension state specialists and county agriculture agents as being very helpful with scores of 4.60 and 4.52, respectively. The producer rankings for the educational resources they used are shown in Figure 11.

Figure 11. Producers' Rankings for Usefulness of Educational Resources

The producers were asked to identify the dairy industry professionals whom they utilized for getting information and ideas for their modernization project. Ninety-three percent of the dairy farmers reported receiving assistance from UW-Extension agents and specialists in planning their modernization projects. Eighty-nine percent reported receiving assistance from their milk equipment dealer, 86% from other dairy producers, 85% from their builder/contractor, and 76% from their agriculture lender. See Figure 12 for the complete summary of professionals who were used by producers, and Figure 13 for how the producers ranked the professionals for their level of assistance.

Figure 12. Percentage of Producers Reporting the Use of Dairy Professionals

 

Figure 13. Producers' Ranking of Assistance from Dairy Professionals

Modernization Planning Process and UW-Extension

Producers were asked how long their planning process took, from the conception of the plan to the actual use of their new facilities. The average time reported for this was 23 months, and the time period ranged from as short as three months to as long as 120 months. When asked if they had developed a written business plan for their dairy modernization project, only 36% indicated that they had a written plan.

When asked if assistance received from a UW-Extension specialist or county agent had an impact on their decision process in modernizing their dairy facilities, 78% indicated that information from UW-Extension impacted their decisions. Producers were then asked to list examples of how assistance from UW-Extension impacted their decisions. Table 7 contains the complete listing of all their responses.

 

Table 7. Reported Areas of Assistance Received from UW-Extension

Number of Reponses

Producer Responses

26

Assisted in parlor location and design

20

Organized tours and farm visits to observe modernization projects on other farms

15

Presented new ideas and options for parlor design and construction

12

Design and layout of cow housing including cow flow and stall size

9

UW-Extension presentations (meetings, tours, pasture walks) started the process

5

UW publications ("Low Cost Parlor" CD and "Retrofit Parlor" paper) were helpful

5

Received reinforcement of ideas and plans

4

Assisted in the permitting process

4

Assisted in preparing budget for modernization project

3

Assisted in manure handling and storage plans

3

County agents and state specialists answered all our questions

3

Assistance with ventilation and feed storage

3

Assistance in water and lighting needs

1

Aided in decision to move and start with a new facility

1

Helped me consider a compost barn

1

Helped me to build the parlor myself

1

Gave estimates for pre-and post-fresh group sizes

 

Producers were asked to list ways that UW-Extension’s assistance to them could be made more effective and valuable to them. Eighty-seven of the producers either listed “don’t know” or did not respond to the question. Three stated that it would be helpful if agents “brought real life dairy experience.” Three producers responded by saying “keep doing what you are doing”; two responded by saying that “UW-Extension was very helpful”; two responded that “agents need to have more awareness of expanding dairies in their counties”; and finally two producers responded that UW-Extension could be more helpful by “working with NRCS and the government to speed up the grant processes.”

The survey asked producers if they would still be in business today if they had not modernized their facilities. Forty-three percent of the 94 producers who answered the question indicated that they would no longer be in the dairy business had they not modernized their facilities.

When asked what the biggest challenge that they had faced during the modernization process, the top answer was working with contractors and/or serving as the general contractor on the project. The other major challenges they reported were deciding what system and the number of cows that would work the best on their farm, budgeting and financing, facility design, cost overruns, and finding good and knowledgeable contractors. See Table 8 below for a list of all the multiple responses received.

 

Table 8. Biggest Challenges Faced by Producers in the Modernization Process

Number of Responses

Producer Responses

16

Working with the contractors/serving as general contractor

10

Deciding what system and number of cows would work best for my farm

10

Budgeting and financing for expenses

8

Milking in existing facilities during construction

8

Design of milking facility and housing

6

Cost overruns

5

Finding good and knowledgeable contractor

4

Manure storage and handling

4

Confidence and motivation to do it

3

Permitting process for building/expanding

3

Getting honest opinions from equipment dealers

3

Did too much of my own labor

3

Changing the management system of feeding/breeding/housing

2

Switching from labor and management roles

2

Sizing stalls

2

Remodeling structured changes

2

Lack of knowledge on some of the tasks we tried to do ourselves

2

Getting cows used to the parlor

1

Site selection

1

Meeting deadline on construction

1

Human resource/dealing with employees

1

Finding the right equipment

1

Finding and obtaining more cows

1

Excavating not done correctly

1

Building the unknown - something you didn’t have experience with

1

Blending new equipment with existing facilities

 

The survey asked producers if they could change one thing about their modernization process and/or project, what would it be. The number one response to this question was if they could do it over, they would have done the modernization sooner. The second most popular response was that they would have made either the parlor or the freestall barns bigger. The third highest comment was that they would have started at an alternate site to allow for future expansion. See Table 9 for the complete listing of what producers reported as something they would change about their modernization project.

 

Table 9. What Producers Would Change about Their Modernization Projects

Number of Responses

Producer Responses

14

Wish we would have done the expansion sooner

11

Wish we would have made the parlor/freestalls bigger

6

Start expansion at another site to allow for additional future expansions

5

Spend more time planning and seeking help in design

4

Start with new building and equipment right away

4

Would not start building in the fall; start earlier in the year

4

Design of parlor

3

Add a dry cow and calving facility

3

Change from mattresses to sand for bedding

3

Hire a more experienced and honest contractor

2

Set deadlines for construction

2

Would have built facilities for young stock at the same time

2

Get bids in writing before starting construction

2

Would have built a drive-through freestall

1

Smaller parlor

1

Should have added an employee break area

1

Lock in low interest rates

1

Put more waterers and head locks in freestall barn

1

Would have built a pit parlor instead of a flat parlor

1

Should have put manure system in at the start

1

Added more cows

1

More planning on manure system

1

Concrete work

1

Hire contractors to do more of the work

1

Use a professional design with detailed blueprints

1

Use custom calf raiser and crop harvester

1

Change curtain design

1

Locate dairy in a less populated area with more available land

1

Add alley scraper

1

Plan to handle waste water

1

Plan for sand-laden manure

1

Would have borrowed more money and built it all at once

1

More space per cow

 

Producers were asked to identify any government or financial programs that they utilized in their modernization projects. Twenty percent indicated they used Dairy 2020 grants, 19% used WEDA loans, and 17% said they utilized NRCS or County Land Conservation cost-sharing programs. All the programs utilized by the producers are shown in Figure 14.

Figure 14. Government and Financial Programs Utilized by Producers

Economic Impacts from Dairy Modernization

As mentioned, the total investment in new dairy facilities by the 99 surveyed farms was $65.3 million in 2008 dollars. The survey also documented several other economic impacts from the data that were collected. The average annual milk production per cow increased by 1,439 pounds, and the number of cows per farm increased by an average of 121 after the modernization projects were completed. These two factors combined for an average increase of 266,535,163 pounds of milk sold for each farm in the study. These production changes are shown in Table 10.

 

Table 10. Changes in Milk Cow Numbers and Milk Production after Modernization

 

Pre-Modernization

Post-Modernization

Change

Milk Cows

7,923

19,689

+11,766

Avg. Herd Size

82

203

+121

Total Annual Milk Production

160,401,113 (lb)

426,936,276 (lb)

+266,535,163

Avg. Production per Cow (lb)

20,245

21,684

+1,439

 

Using these increased milk production numbers, we can put an estimated average dollar impact for each farm as a result of their modernization. Using a farm milk price of $17/cwt. with premiums included, the increased production per cow of 1,439 pounds would have a value of $245 in increased milk income per cow per year. When the average reported increase of 121 cows per farm is added to the increased milk production per cow, it results in the average gross milk sales increasing by a total of 266,535,163 pounds for each farm in the study. If we multiply this average increase of 266,535,163 pounds of milk sold per farm by a milk price of $17/cwt., we get a total increase in gross milk sales of $44.9 million across the 99 farms.

To calculate the average increase in gross milk sales per farm from the pre- to post-modernization period, we need to factor in the average increase of 1,439 pounds of milk per cow along with the average increase in herd size of 121. Using a constant milk price of $17/cwt. for the average pounds of milk sold per farm pre-modernization as compared to the total pounds of milk sold post-modernization, the survey data show an average increase of $466,099 per farm in gross milk sales. See Table 11 for a summary of all the economic impacts reported from the survey.

 

Table 11. Economic Impacts from Dairy Modernizations

 

Change

Dollar Impact

Average Increased Milk Income per Cow

+1,439 lb x $17/cwt

= $245

Average Increased Gross Milk Income per Farm

203 cows @ 21684 x 0.17= $748,315

82 cows @ 20245 x 0.17 = - $282,215

= $466,099

Increased Local Economic Impact from more cows/farm

121 cows x $17,000

= $2.06 Million

Increased Annual Milk Income for the State

+266,535,163 lb x 99 farms x $0.17

= *$44.8 Million

Economic Impact from More Cows in the State

+11,766 cows x $17,000

= *$200 Million

*Total for all herds.

 

Both dairy cows and dairy farms are broadly recognized for the economic activity that they provide to the economy. In 2008, the UW Dairy Profitability Center estimated that each dairy cow generated $17,000 of economic activity in the local economy. If we take this number and apply it to the increase of 121 cows in each herd made possible through the modernization of their dairy facilities, we come up with $2.057 million of increased economic activity in each farm’s local economy (121 cows x $17,000 = $2,057,000).

If we look at the average increase of 266,535,163 pounds of milk sold per farm in the study and multiply it by a price of $17/cwt., we get a total increase in gross milk sales of $45.3 million across the state for the 99 farms in the study. The survey reported an additional 11,766 cows on the 99 farms after modernization. The additional 11,766 cows would have generated over $200 million of economic activity to Wisconsin’s economy.

Author Information

M.W. Mayer and D.W. Kammel

References

Deller, S. 2004. Wisconsin and the Agriculture Economy. Staff Paper #471, Department of Agriculture and Applied Economics, University of Wisconsin-Madison.

Jesse, Ed. November 2008. Growth and Transition in Wisconsin Dairying. Marketing and Policy Briefing Paper #96, Department of Agriculture and Applied Economics, University of Wisconsin-Madison.

Wisconsin Dairy Statistical Publications. United States Department of Agriculture, National Agricultural Statistics Service, 2008. Accessed December 3, 2008. Available from http://www.nass.usda.gov/Statistics_by_State/Wisconsin/Publications/Dairy/index.asp

Wisconsin Dairy Impact. Wisconsin Milk Marketing Board Inc., 2008. Accessed December 9, 2008. Available from http://www.dairyimpact.com/Statistics/Default.aspx

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This work is supported by the USDA National Institute of Food and Agriculture, New Technologies for Ag Extension project.