Report on Dairy Industry in Iowa

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• Dairy Marketing
• Dr. Roger Ginder
• Econ 338a
• Fall 2007
• Lecture 3

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MILK SUPPLY DEMAND

• Supply
• Farms Cows
• Regions
• Production Systems
• Quantities
• Demand Trends
• Utilization
• Consumers

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TOTAL MILK SUPPLY NO. COWS X PROD. PER
COW ____________________________ MILK SUPPLY
(TOT. PRODUCTION)
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Total U.S. Milk Production
Source Dairy Yearbook, ERS NASS
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TOTAL MILK DEMAND NO. CONSUMERS X PER CAPITA
MILK CONSUMPTION ________________________________
MILK DEMAND
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Total U.S. Milk Production and Total Commercial
Disappearance, 1980-2006
Sources Agricultural Statistics, NASS, USDA
Livestock, Dairy Poultry, ERS, USDA
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Basic Economic Concepts

• Supply Function
• Demand Function
• Equilibrium Price and Quantity
• Market Clearing Price and Quantity
• Total Industry Revenue
• Price Supports Above Equilibrium

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Price /
Supply
Pe
Quantity of milk supplied of milk demanded
Qe
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Price /
Supply
Pe
Demand
Quantity of milk supplied of milk demanded
Qe
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Price /
Supply
Pe
Demand
Quantity of milk supplied of milk demanded
Qe
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Price /
Supply
Pe
Demand
Quantity of milk supplied of milk demanded
Qe
Total Revenue P Q
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Total U.S. Milk Production and Total Commercial
Disappearance, 1980-2006
Sources Agricultural Statistics, NASS, USDA
Livestock, Dairy Poultry, ERS, USDA
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Price /
Supply
PS
Pe
Demand
Qss
Qds
Quantity of milk supplied of milk demanded
Qe
Total Revenue Ps Qss
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Price /
Supply
PS
Pe
Demand
Qss
Qds
Quantity of milk supplied of milk demanded
Qe
Total Revenue Ps Qss
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Total U.S. Milk Production and Total Commercial
Disappearance, 1980-2006
Sources Agricultural Statistics, NASS, USDA
Livestock, Dairy Poultry, ERS, USDA
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SUPPLY ISSUES

• FARMS
• PRODUCTION SYSTEMS
• COWS
• PRODUCTION PER COW
• LOCATION OF PRODUCTION
• COSTS AND RETURNS

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DEMAND ISSUES

• PRODUCTS CONSUMED
• PER CAPITA CONSUMPTION
• POPULATION GROWTH

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Number of Dairy Farms, U.S.
Source Census of Agriculture, NASS, U.S. Dept.
of Agriculture
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Number of Iowa Dairy Farms
Source Census of Agriculture, NASS, U.S. Dept.
of Agriculture
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Number of Dairy Farms, Selected States
Source Census of Agriculture, NASS, U.S. Dept.
of Agriculture
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Number of Dairy Cows, U.S.
Source NASS, USDA, on-line database, 3/28/05
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Number of Dairy Cows, Iowa
Proj.
Source NASS, USDA, on-line database, 3/23/05
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Number of Dairy Cows,Selected States
Source Census of Agriculture, NASS, U.S. Dept.
of Agriculture
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Average Number of Cows Per Farm, U.S.
Source Census of Agriculture, NASS, U.S. Dept.
of Agriculture
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Average Number of Cows Per Farm in Iowa
Source Census of Agriculture, NASS, U.S. Dept.
of Agriculture
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Average Number of Cows Per Farm, Selected States
Source Census of Agriculture, NASS, U.S. Dept.
of Agriculture
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Production Per Cow, U.S.
Source NASS, USDA, on-line database, 3.23.05
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Production Per Cow in Iowa
Source NASS, USDA, on-line database, 3/21/05
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Production Per Cow, Selected States
Source NASS, USDA, on-line database, 3/21/05
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USDA, Federal Milk Market Administrator, Tulsa,
2/2002
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USDA, Federal Milk Market Administrator, Tulsa,
2/2005
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USDA, Federal Milk Market Administrator, Tulsa,
2/2005
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Number of Cows Production Per Cow, U.S.
Source NASS, USDA, on-line database, 3/21/05
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U.S.DAIRY PRODUCTION--SUPPLY

• The Production Plant
• Production Systems used
• Producer Size Vs. Production Share
• Geographic Distribution of Milk Production

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GENERAL PRODUCTION SYSTEMS

• Tie stall or stanchion
• Traditional
• Modern (humid climate)
• Modern (dry lot)
• Rotational grazing

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DAIRY PRODUCTION METHODS AND FACILITIES

• Tie stall (stanchion) barn system
• Cows tethered, milked, bedded in stall
• Milking unit moved stall-to-stall
• Pipeline system through barn
• Feed brought to cow
• Loft and silo for feed
• Smaller operations (less 100 cows)

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DAIRY PRODUCTION METHODS AND FACILITIES

• Advantages
• Suited to cold weather
• Cow comfort in winter
• Aesthetics for many
• Existing system On many farms

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DAIRY PRODUCTION METHODS AND FACILTIES

• Problems
• Labor intensive
• High cost - 7,000-10,000/cow (with land and
  cows)
• Expansion is difficult
• Purchasing and handling ingredients in volume can
  be difficult

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DAIRY PRODUCTION METHODS AND FACILITIES

• Advantages
• Suited to cold weather
• Cow comfort in winter
• Aesthetics for many
• Existing system On many farms

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DAIRY PRODUCTION METHODS AND FACILTIES

• Problems
• Labor intensive
• High cost - 7,000-10,000/cow (with land and
  cows)
• Expansion is difficult
• Purchasing and handling ingredients in volume can
  be difficult

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GENERAL PRODUCTION SYSTEMS

• Tie stall or stanchion
• Traditional
• Modern (humid climate)
• Modern (dry lot)
• Rotational grazing

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DAIRY PRODUCTION METHODS AND FACILITIES

• Traditional system
• Milking and housing are separated
• Housing in some type of confinement system
• Concrete corrals
• Utah stalls (open with roof over head)
• Free stall housing (dry stalls)

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DAIRY PRODUCTION METHODS AND FACILITIES

• Feeding down middle and/or on sides
• Feed pelleted concentrate in parlor and forage is
  fed outside
• OR total mixed ration of concentrate and forage
  is fed
• Parlor milking of cows
• Flat barn
• Four on a side end-to-end
• Herringbone

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DAIRY PRODUCTION METHODS AND FACILITIES

• Advantages
• Adaptable to climate variability
• Adapted to home production of forages/grains
• Adaptable to diversified family farm
• Problems
• Labor requirements
• Cost 4,000-7,000/cow (with land and cows)
• Smaller size and input purchasing levels

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GENERAL PRODUCTION SYSTEMS

• Tie stall or stanchion
• Traditional
• Modern (humid climate)
• Modern (dry lot)
• Rotational grazing

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DAIRY PRODUCTION METHODS AND FACILITIES

• Modern free stall system
• Free stall housing
• Lagoon Manure Storage
• Modern parlors
• Free stall in humid areas
• Ventilation
• Flush systems for waste in parlor
• Flushing in concrete walkways and free stalls

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DAIRY PRODUCTION METHODS AND FACILITIES

• Modern free stall systemArid
• Similar Free stall housing With larger parlors
• Reuse water 2 or 3 times
• Free stall in arid areas
• Open sides
• Fans during hot months
• Flush systems for waste in parlor
• Flushing in concrete walkways and free stalls

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DAIRY PRODUCTION METHODS AND FACILITIES

• Milking Parlors
• High Capacity
• Many use 3X milking schedule
• Operate more or less continuously 24/7
• Large bulk tank capacity geared to tanker pickup

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Questions?