For more than a century, the dairy industry has been a cornerstone of Minnesota agriculture. Unfortunately, over the last few decades this cornerstone has been gradually eroded. Business experts say the dairy industry’s business model has shifted, and other states have been quicker to adapt. In western states such as California and Idaho, the favored model is now large, ultra-modern dairy facilities that maximize cow productivity and ensure greater economies of scale. These modern facilities specialize in one thing: milk production. In many cases, this is all they do. The average Minnesota dairy farmer, on the other hand, does not choose to focus entirely on one aspect of the business. He or she is responsible for growing feed, managing the herd, keeping the books and developing a marketing plan. Some people assume the rise of western dairies and the decline of traditional “dairy belt” states means Minnesota’s smaller, diversified dairy farms are doomed to the fate of mom-and-pop hardware stores and drive-in movies parks – once-common businesses now considered charming relics. I disagree. The upper midwest dairy decline is persistent, but it doesn’t have to be terminal. We can still retain and build on what we have in place. Most farmers already know what they need to do: keep production costs low, keep milk quality high, develop a good marketing strategy, and keep an eye out for new business approaches that might work. The Pawlenty Administration also knows what it needs to do: help create an environment in which Minnesota farmers, processors and retailers have the flexibility and support they need to adapt and compete successfully. As we’ve seen in western states, getting bigger is one way to adapt. This approach makes sense for some Minnesota farmers, and so long as they comply with regulations, they should be allowed to expand in a responsible manner. Other farmers may choose to increase profitability by implementing rotational grazing system, which can drastically reduce operating costs. For years, the Minnesota Department of Agriculture (MDA) has helped support a research project in Nerstrand Big Woods State Park designed to get a better picture of the economic and environmental benefits of rotational grazing. The information generated by this project will help farmers who may consider this alternative route to profitability. Some farmers may increase profitability by focusing on superior milk quality. The Quality Count$ somatic cell count reduction program is designed to help farmers in this area. Still other farmers may choose to switch to organic production, or to pursue other market niches that will allow them to get a higher return on their milk. The MDA provides technical and financial assistance to organic farmers and those who are considering making the switch. Regardless of which route a farmer chooses, he or she needs money to carry out their plant. That’s why another area of focus for the Pawlenty Administration is improving dairy farmers’ access to investment capital. We already have a couple of promising ideas on the table that would provide new options for small-scale dairy farmers looking to upgrade or expand. By now, most people realize there’s no magic wand solution to the complex problems facing our dairy industry. But I’m convinced that if we can help enough dairy farm families find their route to profitability, we have a chance to slow or even stop the state’s decades-old dairy production decline.
