John Frey Center for Dairy Excellence Alan Novak- Professional Dairy Managers of PA Alan Zepp- Center for Dairy Excellence Planning for Pennsylvania’s Dairy Industry
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John Frey Center for Dairy Excellence
Alan Novak- Professional Dairy Managers of PA
Alan Zepp- Center for Dairy Excellence
Planning for Pennsylvania’s Dairy
Industry
Executive Director
Center for Dairy Excellence
John Frey
Session Objectives:
Provide an overview of how Pennsylvania
dairy farms and agriculture affect and are
affected by local, regional, national and
international circumstances.
Initiate an honest discussion that increases
the understanding of Pennsylvania’s
agricultural and planning issues including
ways that society and farmers can
successfully coexist and thrive in the future.
Session Agenda notes:
You are the planning experts
We know the dairy industry and agriculture
An overview of the Pennsylvania dairy industry
An example of a dairy plant that considered
PA but chose a site in another state
Open discussion
A Growing, Dynamic Industry
Pennsylvania: a leader in dairy
Top 5 states for Milk
o California
o Wisconsin
o Idaho
o New York
o Pennsylvania
Next 5 states for Milk
o Texas
o Minnesota
o Michigan
o New Mexico
o Washington
PA: Leader in Dairy Manufacturing
o One of the top states for fluid milk processing
o 75 Dairy Manufacturing plants (4th most in US)
o Fluid drinking milk provider for Mid-Atlantic
Issue: demand outpaces supply
= Opportunity
US Dairy
o 1930: 1st 100 billion lbs. annual production
o 1992: 1st 150 billion lbs. annual production
o 2012: 1st 200 billion lbs. annual production
Variables:
o Role of exports
o Role of technology
o Passion for industry, in Pennsylvania
o Need production / Need manufacturing
Milk Production – million pounds 4th Quarter 2011 vs. 4th Quarter 2012*
Top Number: 4Q 2012 Production
Bottom Number: % Change from
2011
*Adjusted for Leap Year
U.S. 4Q production was up 0.9%
355-0.8%
29-9.4% 65
-5.8%
1,976-3.4%
49-9.3%
46-2.1%
2682.7%
191-4.5%
38
0.0%
1,3414.1%
29-12.1%
4851.5%
9193.3%
2380.8% 22
0.0%
31-3.1%
86-2.3%
2260.4%
6372.2%
65-4.4%
3,2573.5%
1500.7%
555.8%
4-14.6%
1,520-0.7%
3,3481.6% 2,209
4.2%
5340.2%
2,336-3.2%
6,8175.1%
2,2713.9%
863.6%
5016.8%
6967.4%
201-11.5%
8046.2%
326.7%
1,066-2.2%
9,989-2.7%
1,1182.8%
334-1.5%
741.4%
2960.7%
160-1.8%
608-0.2%
2,6220.4%
4781.7%
423-0.2%
Milk Production Percent Change4th Quarter 2011 vs. 4th Quarter 2012
Increase greater than 3 percent (12)
Increase from 0 to 3 percent (15)
Decrease from 0 to 3 percent (10)
Decrease greater than 3 percent (11)
8
Milk Produced & Sold Locally
o Milk sold in PA stores comes
from less than 100 miles
o Butter, cheese, yogurt &
chocolate biggest users of PA Milk
Milk & Products Exported Globally
o Revenue from Exported Milk
Returned to PA Communities
Source of Dairy Protein
Exported Share of Production
Dairy in Pennsylvania
The Largest Segment of PA’s #1 Industry
o 10.6 bill. lbs. (or 1.2 bill. gal.) of milk
o 7,400 Dairy Farms
Ranked 2nd Nationally
99 Percent Family Owned
o $2.5 billion in Milk Sales
Average 70-cow dairy
contributes nearly $1
million to local economy
500-cow dairy
contributes $7 million
for local economy
9 cows = 1 job
60,000 PA Dairy Jobs
Dairy Contributes $6 Billion in
Economic Revenue to PA
* From Minnesota Study on Dairy’s Value.
Contributor to
Economy Vital to the Economy
85 Percent of Milk
Income
Spent in Local Community
Circulates through
community 2.5 times to increase total
economic revenue
* From Minnesota Study on Dairy’s Value.
$0
$200
$400
$600
$800
$1,000
$1,200
Idaho
Potatoes
Florida
Oranges
Pennsylvania
Dairy
Pro
du
ctio
n V
alu
e
in M
illio
ns
Dairy is worth more to PA
than Oranges are to Florida
and Potatoes are to Idaho.
Value of Dairy to Pennsylvania
FL, PA, ID Departments of Agriculture
Concentration of Dairy Cows in PA Largest
Concentrations
• Lancaster
• Franklin
• Bradford
• Lebanon
• Berks
• Blair
• Chester
• Somerset
• Crawford
• Mercer
National Ag Statistics Service-PA, USDA
Trends in Pennsylvania Dairy Industry
o Production
o Processing
o Consumption
Evaluate needs for growth & vitality for
Pennsylvania’s Dairy Industry
o 20 Prescriptions Offer Recommendations
o 10 Webinars will review analysis results and
offer insight into prescriptions
2013 PA Dairy Analysis:
The following statement best
describes my farm’s future
4 %
Not confident in ability
to meet profitability
goals.
Will need to modernize
to meet profitability
goals
Will need to grow
herd size to meet
profitability goals
Confident in ability to
Meet profitability goals
Land Availability = Important
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Small Dairies (30 to 100Cows)
Mid-Size Dairies (101 to250 Cows)
Large Dairies (251+ Cows) Total (All Dairies)
Land availability- very important- 2008 Land availability- very important- 2012
US and PA Farmland Values
Farmland Rental Cost
Elizabethtown College
Confidence Survey
o Regulatory/permitting
o Volatile margins
o Family Farm transitions
o Activists Agenda
o Land Availability
o Pace of modernization, reinvestment
Threats for Production Dairy
Executive Director
Professional Dairy Managers of
Pennsylvania
Alan Novak
Processing Plants
The Muller-Quaker Case:
Muller- Quaker: US Yogurt Plant Muller- founded in 1896
by a German dairy farmer
Quaker Oates began in
1877 – currently owned by
Pepsi-Cola
Investigated the Reading Area
Genesee County and New York State put and
advisory group together to facilitate site selection
and construction
Muller-Quaker Case: PA or NY?
Preferred Pennsylvania “+”
o Logistical advantages
o PA offered direct routes to east seaboard retail
o Cost savings in PA
o Pull milk supply from PA and NY
Pennsylvania “-” / New York “+”
o Initial investment much higher
Price of land
o Fewer state subsidies in PA
o NY / team of 28 people ready to “coordinate”
Utilities, financial, reality, site, development, etc.
“New York very organized and professional”
Genesee Valley Agri-Business Park
Genesee County
Economic Development
Center- Batavia, New York
Shovel Ready Sites
The two companies spent
$206 million on the factory in Batavia.
Batavia, New York
Risk Management Program Manager
Center for Dairy Excellence
Alan Zepp
Sustainability = Profitability
Smart
Growth/Growth Management
Urban growth boundaries
Comprehensive planning and zoning
2010 State Land Use and
Growth Management Report
“Pennsylvania’s total developed land area
increased from 4.1 percent of the state’s
total land area in 1992 to 9.6 percent in
2005—with the most significant acreage
increases occurring in the Southeast and South
Central regions. A total of approximately
500,000 acres of agricultural land was lost to
development within these two regions.”
2010 State Land Use and
Growth Management Report
“The Southeast region experienced the
greatest percentage loss in acres of forest
to developed land (20.4 percent), while
three regions (Northern Tier, North Central,
and Central) experienced less than a 2
percent loss. The Southeast Region also had
the greatest percentage loss of acres of
agricultural land to developed land (24.4
percent), while the Northern Tier had the
lowest percentage loss with 4.9 percent.”
Dairy Community Contributions
Open Space
Tax contributions
exceed municipal needs
Jobs
Water Recharge
Community Pride
Dairy Requirements
Long Term Planning
Realistic Regional Zoning
A critical mass of quality
land
Support businesses
Ability to grow and modernize
Reasonable setbacks
Uncongested roads
Acres to support 1 cow
Change in Acres of Corn Silage
Regulatory Compliance Cost
Number of CAFOS &
Compliance Cost
Pennsylvania’s requirements
comparable to other states
Dairy Profit Teams
Dairy Transition Teams
Dairy Decision Consultants
Risk Management Resources
Upcoming events: o December 11, 2013: Annual Meeting - Harrisburg
o February 12,13 2013: PA Dairy Summit – State College
Dairy Center Resources
Center Foundation
Dairy Leaders of Tomorrow
o High School Business Management Curriculum
Prepares students to work in dairy production careers
o Dairy Tours
Exposes students to well-managed dairy businesses
o Scholarships
Awards outstanding
students pursuing dairy careers
24 Applicants
Discussion Questions:
What do farmers need to know before they
approach the planning process?
What do you wish farmers would do more ?
…less of?
Legislative action?
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