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Higher Costs Unfold as Dairy Tech is Removed

More natural resources required; Growth more driven by cow numbers.

By Sarah Muirhead

In the general sense, sustainability "is the capacity to maintain a certain process or state indefinitely" -- a concept that is applied to all aspects of life, including milk production. However, according to Mary Ledman of Keough Ledman Associates Inc. in Libertyville, Ill., sustainability goes hand in hand with affordability when it comes to the food production system.

"Given the goals of reducing the carbon footprint in tandem with feeding a hungry world, we cannot turn a blind eye to improving productivity through technology," said Ledman, who has just completed an analysis of the economic impacts resulting from removing recombinant bovine somatotropin (rbST) from the dairy industry in Michigan and the U.S. as a whole.

For more than 25 years, U.S. milk production has risen by about 1% annually while the number of cows concurrently has decreased by nearly 1% annually. Increased milk production was achieved through an average gain of 2% annually in milk per cow, which offset declining cow numbers.

In recent years, however, production dynamics have changed. The U.S. dairy herd increased. But productivity per cow has not kept pace with the historical growth rate.

For the first time in 25 years, higher cow numbers in 2009 will be the key driver of milk production growth rather than productivity per cow, said Ledman. Through October 2008, U.S. milk production increased 2.0% due to a 1.3%, or 118,500 head, growth in cow numbers and just a 0.7% gain in milk per cow.

Going forward, some productivity increases will come from the natural evolution of replacing older, less-productive cows with genetically superior heifers, he added. But additional improvements in per-cow productivity will be key to growing total milk production in 2009 and beyond while maintaining or even shrinking the carbon footprint.

Future implications

Options for increasing total milk production for safe, wholesome, nutritious diets are to either (1) increase the number of cows milked, or (2) improve productivity through technology.

When increased milk production comes from more cows milked, Ledman said more natural resources are needed to meet the basic needs of the additional cows. Likewise, the cost of producing each gallon of milk increases since more cows must be maintained to produce the additional milk. Milk prices under this scenario can be expected to increase for everyone in the dairy food chain, from co-ops to consumers.

Improving productivity through the use of technology at the farm means fewer natural resources are required to meet the basic needs of fewer cows.
The cost of producing each gallon of milk increases less as fewer cows are needed to produce the additional milk. Milk price increases can be expected to be lower for everyone in the dairy food chain, thereby giving retailers and consumers greater choice-based purchasing options in the dairy case.

More cows in Michigan

Michigan has long been among the top milk-producing states on a per-cow basis. Many cows in the state's herds have achieved a 10 lb. (more than 1 gal.) or greater production increase when supplemented with rbST.

However, by the end of 2007, the vast majority of Michigan dairy producers no longer could use rbST as a herd management tool if they wanted to retain access to milk markets. In 2008, after several years of strong year-over-year gains, Michigan's total milk production is expected to increase by less than 1%, said Ledman.

Even more dramatic during this period will be the change in productivity per cow. Compared with figures from the previous year, monthly milk production per cow decreased from 2% to 5%, she said. Through October 2008, the gap was 3.2%.

Meanwhile, Michigan milk producers have added 14,000 cows versus the prior year. But as Ledman found, they still haven't overcome the decrease in productivity per cow. From the Michigan analysis, it was concluded that:

• As milk producers in the state lost the choice to supplement their cows with rbST, they were not able to offset the subsequent decline in productivity per cow even as cow numbers increased by 14,000 head.

• During 2007, cost-of-production savings for milk producers using rbST was estimated at 73 cents/cwt., or 6 cents/gal.

• Growing the milk supply by adding more cows increases the demand for natural resources and costs for everyone in the dairy food chain.

• Growing the milk supply by leveraging technology to enhance milk yields is more sustainable than adding more cows.

For the retail sector, dairy producers and consumers alike, this should be a concern. Growth of the milk supply by adding more cows means increases in demand for natural resources and higher costs for everyone in the dairy food chain, she said.

Through her work, Ledman concluded that growing the milk supply through leveraging technology to enhance milk yields is much more sustainable than adding more cows to the nation's dairy herd.

Courtesy of Further analysis of the issue will appear in the Dec. 29 Feedstuffs.

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