The Michigan dairy industry: A success story

The Michigan dairy industry is an economic success story and a major contributor to Michigan’s economy.

From the early 1990’s until 1999 the Michigan dairy industry was in a period of decline losing almost 10% of its dairy cows. The industry began rebounding in 2000 and in the past 12 years cow numbers have grown by more than 25%. During the same time period the Michigan dairy industry has also experienced great strides forward in production and economic efficiency. The growth of the dairy industry has made a major positive contribution to Michigan’s overall economy.

Michigan Dairy Cow numbersIn terms of cow numbers, as shown in the Total Michigan Dairy Cows graph, Michigan averaged 366,000 cows in 2011 which was a 22.4% increase over the low of 299,000 in 1999. During the 1995-2011 time period, Michigan averaged a 0.8% annual growth rate in cow numbers which was far greater than the national average increase (+0.1%). Current (February 2012) Michigan cow numbers stand at 374,000 head. Michigan has experienced the most growth in cow numbers of the USDA’s Top 23 dairy states east of the Mississippi River during this time period. As a rule of thumb, dairy farms require about one full-time employee per 75 cows. This means that since 1999 the number of persons employed on Michigan dairy farms has increased by about 1,000 employees. The number of employees in dairy allied industries, such as feed suppliers, milk processors, etc. is more difficult to ascertain, however, it is surely up significantly due to the increased size of the industry.

Total Michigan Milk ProductionMichigan has also experienced tremendous growth in milk per cow since 1995 (Total Michigan Milk Production graph). In the 17-year period from 1995-2011, milk per cow was lowest in 1996 (16,969 lbs/cow per year). During the 1995-2011 time period milk per cow increased above the national trend rate (+1.5% per year) at +1.9% per year, or +381 pounds on an annual basis as compared to the national average of 298 pounds (Michigan 28% above national average). Milk per cow in Michigan during this time period has averaged fifth highest in the United States. Average milk production per cow has only been higher in Washington, Arizona, Colorado and New Mexico.

Total Michigan Milk IncomeMichigan has also experienced tremendous growth in total value of milk sales (Total Michigan Milk Income graph). Average value of total Michigan milk sales has increased 7.8% per year despite a tremendous variation in the average annual Michigan “All-Milk Price” (Michigan All Milk Price graph). The lowest annual total value of milk sales was 2002 ($722 million) and the highest was 2011 ($1.777 billion), which was more than a 146% increase. During the 1995-2011 time period, the average gross income per cow in Michigan has been the highest in the entire U.S.

Michigan All Milk Price graphDairy farm milk sales is the top income producing agricultural commodity in Michigan. For example, in 2008 Michigan’s gross milk income of $1.49 billion accounted for nearly 23% of Michigan’s total agricultural cash receipts of $6.6 billion. The increased number of cows and milk production has meant a tremendous increase in dairy farm assets and in milk processing capacity. It is estimated that total capital investment in Michigan dairy farms has increased by over $1 billion since 2000.

Dairy production is a real bright spot in the Michigan economy. Dairy is a major economic engine that is at the top of the Michigan agricultural economy and consistently produces the highest gross income per cow of all states in the U.S. Ag economists at Michigan State University estimate Michigan’s dairy industry makes a $91.4 billion contribution to Michigan’s economy. So, the next time you see a Michigan dairy farmer be sure to thank them for their contribution to our state’s economy.

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