Currently, Pennsylvania ranks fourth in domestic milk production behind California, Wisconsin, and New York, and ahead of Minnesota and Idaho. Judging by 50-year trends that have seen states such as California and Idaho make sharp relative gains in production, it seems clear that Pennsylvania dairy producers must get bigger and better to compete and avoid constant erosion of farm income.

“Unless Pennsylvania changes the fundamental structure of our dairy businesses, the national trend towards higher production in larger herds will diminish the state’s dairy importance,” warns Bill Heald, professor emeritus of dairy science. “Pennsylvania needs all of its dairy herds to not just maintain, but also to grow its national market share. If we don’t, Pennsylvania risks losing its dairy infrastructure—suppliers and processors.”

Over the last 50 years, U.S. milk production has increased by nearly 51 billion pounds nationally—that equates to 62,000 more cows each year. Production promises to expand in the future to meet the nation’s growing demand. “The question is,” says Heald, “will Pennsylvania share in this opportunity to grow, or will it stay neutral or lose more market share, as has been the case for the midwestern and eastern dairy states?”

The top five dairy states produced just 37 percent of the nation’s milk in 1951. Today, six states—California, Wisconsin, New York, Pennsylvania, Minnesota, and Idaho—produce nearly 60 percent of the nation’s milk.

However, changes in top dairy states have occurred. “Idaho was a nontraditional dairy state just 10 years ago, and now it ranks sixth nationally,” says Heald. “California went from fourth nationally to number one, producing more milk than Pennsylvania, New York, and Minnesota combined. The other top dairy states have faltered. Minnesota peaked in percentage of national milk produced in the ’60s, New York in the ’70s, Wisconsin in the ’80s, and Pennsylvania more recently.

“Many of the top 20 dairy states are losing their dairy industry while the national need for milk continues to grow,” adds Heald. “The industry is consolidating into fewer dairy states and fewer dairy herds. Pennsylvania needs to keep up with these trends.”

Milk production per cow has been a strong indicator of whether a state will grow or fade in the national scene. States in the top six that fell below the national average for milk production per cow also lost in percentage of national market share of milk in about the same decade. By contrast, states that were above the national average per cow grew dramatically, including nontraditional dairy states.

California grew from 5 percent of the national milk production in 1951 to 20 percent in 2001, while Idaho grew from under 2 percent to nearly 5 percent in just the last decade. “Pennsylvania grew slowly in percentage of national market share of milk until recently,” Heald says. “Our state has dropped below the national average production per cow, and now its percentage of national market share of milk has started to fall.”

Production has continued to grow in western states like Washington, California, Arizona, Idaho, and New Mexico. All of these states have above-average milk production per cow and herd size.

“Pennsylvania was below the national average production per cow and is down 0.5 percent in total production,” notes Heald. “Pennsylvania was only slightly below the national average in 2001; strong increases in milk production per cow for are needed to reverse this trend.”

Change in average herd size also can indicate where a dairy state is heading. Nearly 60 percent of the nation’s milk is produced in herds larger than 200 cows. Nationally, herds of all sizes declined—except those with 200 or more cows. The herds capturing the greatest increase in national market share of milk were herds greater than 200 cows (predominantly in the 2,000 cow and larger herd sizes), while those seeing the greatest decline were herds with 50 to 99 cows.

“Only 17 percent of Pennsylvania milk is produced in herds greater than 200 cows,” says Heald. “That’s well below the national average, but changed quickly from 8 percent to 17 percent in the last decade. Like the national trends, only Pennsylvania’s herds with greater than 200 cows are increasing market share of milk. All other herd sizes are declining.”

Gains in percentage of market share of milk with herds greater than 200 cows is not simply due to more cows, and is likely caused by a variety of factors. “Large herds tend to have higher production per cow, receive higher income, pay less for inputs and services, have better-quality feeds, and attract the best employees and service providers,” Heald says.

Heald relates a conversation he had recently with a top service provider. “He said to me, ‘I am expected to increase my company’s bottom line each year. I can do that faster by working with one 1,000-cow herd than ten 100-cow herds or twenty 50-cow herds. It takes less effort on my part to generate more business with large herds. I can afford to do more for these larger accounts. Additionally, large herds are better prepared to do business.’”

However, there are successful and profitable herds with fewer than 200 cows, Heald points out. “Anyone working with the Pennsylvania dairy industry knows of highly profitable herds in each size classification. However, large, high-producing herds do enjoy favored business status and are becoming the norm. To stay competitive, owners of herds with less than 200 cows need to develop strong business strategies that help them to successfully compete.”

—Jeff Mulhollem