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State near bottom for U.S. sales of livestock

By JOSEPH R. HICKMAN, Ph.D.
Special to The New Jersey Farmer

NEW BRUNSWICK — In New Jersey 86 percent of farm gate revenues comes from sale of crops and only 14 percent from sales of livestock, dairy, or poultry products.
This percentage revenue stream from animal products places New Jersey near the bottom among states.
Expanding opportunities for livestock farming, especially pasture-based production systems, can significantly improve the sustainability of agriculture. When farmland is planted to perennial grasses and legumes to feed livestock, carbon is effectively removed from the atmosphere and sequestered in soils.
A recent survey of the Mid-Atlantic region showed that soils under pasture contain 62 percent more organic carbon than soils under row crops.
In contrast to many states that have large livestock industries and an over abundance of manures, New Jersey has a deficit of local animal manures for building soil fertility.
Thus, diversifying New Jersey agriculture to include more pasture-based livestock systems would provide local manures for soil fertility and carbon sequestration as a sustainable way to build soil quality.
At more than $15,000 per acre, New Jersey farmland is among the most expensive in the nation.
For comparison, neighboring Pennsylvania and New York have per acre farmland values of $4,775 and $2,275, respectively.
Demand for fresh whole fat unprocessed milk, commonly referred to as raw milk, has increased markedly.
By some estimates about 10 million people in the United States consume milk raw. Currently about half of the states in USA allow raw milk sales.
Connecticut, New York, and Pennsylvania are states in the Mid-Atlantic region that permit raw milk sales.
Interestingly, most large milk-producing states permit raw milk sales.
New Jersey currently does not permit raw milk sales and ranks 44th among states in terms of dairy production.
In Pennsylvania, farms with raw milk permits increased from about 25 to over 150 in the last decade.
Within that same timeframe the total number of dairy farms in Pennsylvania declined by about a third due to consolidation.
The total number of cows in Pennsylvania has remained about the same.
Those dairies with raw milk permits tend to maintain small herds and direct market.
Legislation that would allow sales in New Jersey and several other states is pending.
In New Jersey, a bill that would have permitted raw milk sales overwhelmingly passed the Assembly in spring 2011.
A Senate hearing was held in December 2011, but the bill was never voted on.
The same bill was reintroduced on February 2, 2012 when after a hearing by the Assembly Agriculture Committee the vote was 5 in favor and zero opposed.
An unknown number of New Jersey raw milk consumers travel to neighboring states to purchase raw milk.
Ironically, these New Jersey consumers travel past local farms that want to, but are not permitted to sell raw milk.
The potential economic impact on New Jersey agriculture may be illustrated by one notable example of a Pennsylvania organic raw milk dairy farmer who supplies many New Jersey consumers.
This particular farmer from central Pennsylvania currently operates weekly drop points in Eastern Pennsylvania at two locations on the West bank of the Delaware River.
At just one of the two raw milk drop points, this dairy farmer serves over 250 families — nearly all of them crossing over the border from New Jersey.
In addition to organic raw milk, which sells for $7.50 per gallon, this farmer also sells organic pasture raised eggs, chicken, turkey, beef and pork and sometimes even vegetables and apple cider.
Well more than $100,000 of annual sales take place at just one of the two drop points and sales are still expanding (personal communication with this Pennsylvania dairy farmer).
Milk, more than any other food is what regularly brings people to the market place. Many retailers sell milk simply to bring traffic to the market and this drives the sale of other products.
Farm fresh organic grass-fed raw milk is a particularly strong magnet that attracts shoppers and leads to the sale of many other farm fresh foods. This point has been demonstrated by examples of whenever a farm discontinues sales of raw milk; sales of all other farm products drop markedly. Arguably, the New Jersey farm economy is disadvantaged from marketing local farm fresh foods by the current law prohibiting the sale of raw milk.
Raw milk consumers want quality and strongly prefer milk from grass-fed cows with minimal grain feeding.
New Jersey has favorable climatic and soil conditions for growing grasses that would support an economically viable pasture based raw milk dairies.
Also, with the large population density of New Jersey within driving distance of farms, the Garden State is well positioned for direct on-farm sales of raw milk from small to modest sized dairy operations.
Two case studies described below serve to illustrate the economic viability for raw milk dairy farming.
In 2010, Joel McNair, editor of Graze Magazine described the potential economics of a small pasture-based raw milk dairy.
He assumed that the dairy would be selling whole raw milk produced by just 20 cows directly to the consumer. He projects a production level of 20,000 gal of milk selling for $5 per gallon.
This would result in an annual gross income of $100,000 (Alternatively, if the milk price is set at $7 per gallon, the annual gross income may be $140,000).
This 20 cow dairy would require about 40 acres of good pasture land along with a simple barn, and a small milking facility kept exceptionally clean.
A second example is of an organic 43 cow dairy operation that in 2008 had a net farm income of about $22,000 from selling its organic raw milk to a processor for pasteurization. If one made the assumption that all of that raw milk would instead be sold directly to consumers at $6 per gallon, the net farm income may be raised to $340,000. This estimate is based on figures provided by an organic dairy farm in New England.
The real economics of raw milk dairy farming probably lies somewhere between these models. Certainly a dairy farm selling to processors cannot automatically switch over to raw milk sales without changes and upgrades in production system. Also, milk production decreases as cows are transitioned from a high grain diet to predominately pasture and forage feeding. Furthermore, because raw milk sales rely on direct marketing, time and effort are required to develop a customer base. Raw milk consumers tend to be well educated and rather discriminating in terms of production system and food quality. The “Know Your Farmer, Know Your Food” philosophy very much applies to the raw milk market.
Another approach to the question of the economic potential of raw milk is to use some assumptions to estimate the size and value of the market. By assuming that about 3% of the population (percentage based on CDC survey of several sates in the USA conducted in 2007) of New Jersey are or want to consume one gallon of raw milk per week at $7 per gallon, the value of that raw milk is estimated to potentially be about $95 million dollars annually.
These scenarios suggest that permitting raw milk dairy farming in New Jersey would present new economic opportunities and potentially reinvigorate dairy farming in the Garden State.
Also, worth noting is that direct marketing of raw milk within New Jersey, would facilitate marketing of locally produced meat, eggs, vegetables, and fruit. At the present time, due to the probation of raw milk sales, millions of dollars in potential local farm income is leaving New Jersey to surrounding states.
A survey conducted in 2009 by NOFA-MA of raw milk diaries in Massachusetts indicated that permitting raw milk sales had a positive economic impact in that state. Massachusetts may serve as a model for New Jersey because the states are of similar size and population density.
A summary of the Massachusetts survey is available at this link http://www.nofamass.org/programs/organicdairy/pdfs/RawMilkinMassachusetts.pdf
Some have argued that food safety concerns with legalizing raw milk sales could result in an outbreak that would damage the market for all milk. However, this argument must be considered in the context that no food can be guaranteed to be perfectly safe, including pasteurized milk. Two notable examples of pasteurized milk outbreaks documented in JAMA: In 1985, more than 168,000 people were sickened with Salmonella from pasteurized milk and in 2007; Listeria from pasteurized milk was linked to 3 deaths. It is questionable whether the market for pasteurized milk suffers significantly from illnesses and death linked to pasteurized milk.
People drinking raw milk are passionate about their food choice.
They like the taste or believe in or have personally experience health benefits from drinking raw milk.
They will find one way or another to procure raw milk.
The real question is will that raw milk come from a local dairy, a herd share, a family cow, or another state?