Pennsylvania Dairy Study 2017

Pennsylvania’s dairyland is in a state of transition, with new dynamics emerging every day. To provide insight on a path forward for this important segment of Pennsylvania agriculture, the Pennsylvania Department of Agriculture and the Center for Dairy Excellence have commissioned Dr. Andrew Novakovic, Dr. Mark Stephenson and Dr. Chuck Nicholson to lead a year-long study to evaluate opportunities and inhibitors to grow Pennsylvania’s dairy industry.

Click here to review the Executive Summary of the Pennsylvania Dairy Study 2017.

Click here to review the full 180-page Pennsylvania Dairy Study 2017.

Key Points and Recommendations:

Final reports resulting from this study are available below. The study has covered a large number of elements, including farm-level and processing-level performance, the economic incentives for investments in processing capacity, economic impacts of the state’s dairy industry, the capacity of PhilaPort to support export market development and impacts of the PMMB. To see a summary of the study and key points and recommendations identified within the study, click here.

Components of the 2017 Pennsylvania Dairy Study: Below are components of the 2017 Pennsylvania Dairy Study. To read the full reports and key findings, click on the links below.

  • Phase I Findings: This study was begun early in 2017 after discussions with leadership of the Pennsylvania Department of Agriculture and the Center for Dairy Excellence. The objectives for Phase I are primarily diagnostic, focusing on a review of aggregated secondary data regarding farm and processing sector performance.
  • Summary of PA Dairy Producer Survey: In June of 2017, the Center for Dairy Excellence sent a survey to Pennsylvania dairy farms. There were 991 responses representing 1,232 households with 880 of these farms milking cows when they completed the survey. This corresponds to around 14 percent of the 6,570 dairy farms in the Commonwealth. The participating farms represented about 9 percent of Pennsylvania’s milk supply.
  • Analysis of Economic Incentives for Additional Dairy Processing Capacity: Motivated by concerns about the adequacy of dairy processing capacity in Pennsylvania (and the Northeast more generally), the team evaluated the benefits and costs of investments in additional processing capacity in PA based on milk supplies and product demands for March and September 2016 using a detailed spatial economic model of the US dairy sector.
  • Farm Financial Analysis: This component compares the financial performance of Pennsylvania farms to those in three other states with similar agronomic resources (Michigan, New York and Wisconsin) and across farm size categories regardless of the state.
  • Dairy Export Potential to PhilaPort System: This component describes the current capabilities of the Port of Philadelphia to support growth in dairy product exports, assesses the port’s historical role in dairy product exports from the US and the mid-Atlantic, and estimates selected economic impacts of reallocation of dairy product exports from other ports to PhilaPort.
  • Analysis of the Impacts of the Pennsylvania Milk Marketing
    Board on Fluid Milk Retail Prices and Processing Volumes: This component reviews evidence regarding two hypothesized effects of the PMMB: price enhancement that could reduce fluid milk sales and incentives to process fluid milk products outside of Pennsylvania.
  • Economic Multiplier Impacts: The purpose of this analysis assesses the contribution of dairy to the Pennsylvania state economy, using input-output
    analysis to construct a set of economic multipliers custom to the Pennsylvania economy and six sub-regions. To undertake this analysis, researchers use the economic modeling system IMPLAN and the base year data for 2015.
  • Stakeholder Comments and Comparative Organizational Support:  This document summarizes information on three related topics: the feedback of key dairy industry stakeholders on issues related to the overall study on growth and competitiveness, the themes discussed at “listening sessions” during Fall 2017, and an overview of the comparative organizational support networks in Pennsylvania, New York and Wisconsin.
  • Projections of Prices, Farm Profitability and US Dairy Product Exports for 2018 – 2025: This component assesses likely future outcomes for milk prices, farm profitability and the potential for expansion of US dairy product exports. Although these projections (and any projections of dairy industry outcomes over this time horizon) are rather uncertain, the results suggest general trends and possible opportunities that should be monitored going forward. These projections can provide a basic context for farm-level planning, processing capacity investments and programmatic efforts to achieve a greater degree of growth and competitiveness for the Pennsylvania dairy industry.

Presentations related to Study:

  • Dr. Nicholson presented a preliminary look at the findings of Phase I of the study at the 2017 Ag Progress Days Dairy Industry Breakfast. Click here to access that presentation. 
  • Dr. Novakovic presented a look at why the study is being completed and what needs to be considered during the 2017 Dairy Financial Conference and the listening sessions held in September. Click here to access that presentation.

For more information about the study, please contact the Center for Dairy Excellence at 717-346-0849 or by emailing Dairy Risk Management Program Manager Alan Zepp directly at azepp@centerfordairyexcellence.org.