Building on new farm bill, Missouri aims to reverse dairy decline

By Sara Wyant

© Copyright Agri-Pulse Communications, Inc.



WASHINGTON, June 4, 2014 - Got dairy cows? If so, the state of Missouri would like to invite you and your cows to relocate.

For farmers who expand or start a new dairy operation in the “Show Me” state, there could be an added bonus:  producers who purchase supplemental margin insurance coverage under the new Farm Bill's dairy margin program (expected to be available from USDA this fall) will be reimbursed for 70 percent of their federal premium payment, with a cap of 34 cents per hundredweight.

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The state General Assembly recently approved provisions of the “Missouri Dairy Revitalization Act of 2014” by large margins. In addition to the premium “rebate,” the bill provides 80 scholarships for students in ag-related degree programs at Missouri colleges and universities who agree to work in the state's agricultural industry for at least four years.

Agricultural groups are cautiously optimistic the bills will be signed, but Governor Jay Nixon, a Democrat, is currently reviewing the legislation, which is part of a larger omnibus bill, and has not yet indicated whether or not he approves because of other provisions related to deer farming.

The legislation will receive “a full and fair review by the governor's office before the governor takes action” by the July 14 deadline, says Nixon's Press Secretary Scott Holste.

Like several other states, Missouri has watched the number of its small dairy operations decline as production increased in larger operations in western states like Idaho and New Mexico. Productivity per cow has also increased dramatically, so it doesn't take as many cows to meet current demand.

Still, the trends are troubling, especially in states where the processing infrastructure is already in place and the milk supply is becoming more expensive to acquire. By some estimates, over 60 percent of the milk processed in Missouri is imported from other states, including Wisconsin and New Mexico.

In Missouri, dairy cow numbers dropped steadily from 137,000 in 2002 to only 94,000 reported in the 2012 Census of Agriculture. In states like North Dakota, the decade-long drop was more dramatic: from 40,000 head to only 18,000 reported in 2012. But even in New York, where companies like Chobani plan to expand processing facilities, the number of dairy cows have gradually declined over the last decade, from over 675,000 in 2002 to 610,000 in 2012. (See USDA map above.)  Even though dairy margins are high now and some operations are expanding, the story has been much different for much of the last decade.

“With the loss of dairy farms continuing in Missouri at an alarming rate due to drought and poor margins, the pressure of finding local milk for our 15 dairy processing plants has reached a critical stage,” Larry Purdom, president of the Missouri Dairy Association (MDA), said in a release heralding the new legislation. “One plant closed at Monett last year with the loss of 60 jobs,” he said.

State lawmakers really took notice when dairy industry leaders pointed out that it's not just farm jobs, but a wide variety of other jobs that were at risk if the trend continued, explained Jackie Klippenstein, vice president for industry and legislative affairs with the Dairy Farmers of America. DFA, which has been actively lobbying on the state legislation, is a cooperative serving 9,000 farms in 48 states.

A University of Missouri study showed that in 2011, dairy product manufacturing industries in the state directly employed 5,515 workers with a total payroll of $258 million. The plants produced an estimated $4.4 billion worth of dairy products.

“Missouri's dairy product manufacturing industry revenues translated into statewide total economic output worth $7.7 billion,” according to the study. “When you include the jobs created at the farm level and with additional suppliers, a total of 23,297 jobs were supported providing $1.2 billion in labor income to Missourians in 2011,” the study asserted.

Other states like Nebraska and North Dakota are taking note, but thus far, no state legislation similar to Missouri's has developed. Still, that hasn't stopped key officials from trying to “recruit” cows to come home to their states.

Touting his state's open spaces and favorable business climate, South Dakota Governor Dennis Dauggard went to California two years ago on a recruiting mission.

“We're on a cattle roundup,” the Republican told reporters. “So if you're out there in the world of dairying and you're looking for a place to plant your dairy, South Dakota is open for business."

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