Md. watches as 3 Northeastern states collaborate to boost dairy production, profits

On the farm

July 02, 2006|By TED SHELSBY

Maryland agriculture officials will be watching Pennsylvania in coming weeks to see whether some of the recent steps taken to preserve the dairy industry there could help farmers here.

Last month, Pennsylvania teamed with New York and Vermont in search of ways to boost the profit of dairy farms, increase their share of the U.S. milk market and reverse the trend of farms going out of business.

The collaboration comes on the heels of Pennsylvania's implementation of a program to pay farmers in the northeastern part of the state a bonus for increasing their annual milk production.

"We will be taking a look at what these three states have done and see if they represent any opportunities for us," said S. Patrick McMillan, assistant secretary of the Maryland Department of Agriculture. "We are always looking for ways of shoring up our dairy industry."

McMillan said he was not familiar with details of the agreement among the other states but that "it is not a bad idea to cooperate as a region."

On June 12, the agriculture secretaries of the three states signed a memorandum of understanding that Pennsylvania Gov. Edward G. Rendell said was designed to help make state dairy farmers more competitive in national and international markets.

Under terms of the agreement, the three states will work to promote the profitability of dairy farms throughout the industry. Rendell said the plan would include aggressive efforts to market the region to milk producers and processors; perform cooperative dairy research within state institutions; and combine the resources of the three states' agriculture departments.

Pennsylvania's agriculture secretary, Dennis Wolff, said the agreement was designed to make the region's dairy farms more competitive and give producers in the Northeast "an opportunity to gain more market share through coordination of resources with the states working together as one."

Farms in the three states produce about 25 billion pounds of milk a year, about 15 percent of the nation's total production. New York is the third-largest milk-producing state in the country, followed by Pennsylvania. Vermont is No. 15.

Pennsylvania alone has about 8,600 dairy farms, which produced about 10 billion pounds of milk last year, valued at $1.7 billion.

Maryland's dairy industry is small by comparison, ranking 28th in the nation. Its 650 farms produced 1.2 billion pounds of milk last year, valued at $186.6 million. Although Maryland has been losing farms at an alarming rate in recent decades, dairy is still the state's third-largest agricultural sector.

Pennsylvania, too, has been losing dairy farms, about 250 a year in recent years, said Gary Heckman, executive director of the Center for Dairy Excellence, a nonprofit organization supported by the Pennsylvania Department of Agriculture that seeks to maintain the viability of the dairy industry.

In its attempt to stop that decline, Pennsylvania implemented a program this year that pays farmers in two northeastern counties - Bradford and Tioga - a bonus of $3 per hundred pounds if they increase their production by at least 5 percent.

Heckman said the program is financed by state and federal grants, and contributions from three of the dairy cooperatives serving the region. The maximum payout is $600,000.

He said the goal is to produce enough milk to retain Pennsylvania's milk processing plants along with the manufacturing companies that convert milk into other products such as ice cream and cheese.

"The other states in our partnership might want to do something similar to this, but that will be up to them," he said.

Heckman listed several examples of how the three-state agreement could benefit farmers:

The establishment of teams of farm experts to help farmers evaluate their businesses and identify ways of improving their operations.

He said the teams would be a diversified group, including farm extension agents, a banker, a veterinarian and a nutritionist, who would help with the diet of cows to produce the most milk at the lowest cost.

"The team would be like a board of directors, and it would look for ways to make farms more profitable," Heckman said.

A software program developed by Penn State University would use financial and production data to evaluate a farm's operation and make adjustments to increase profitability.

The states would share the cost of research to benefit farming. The states would work together to identify needed research projects and then split the cost.

"Pennsylvania might do two projects, while New York pays for two more and Vermont pays for others," Heckman said.

There are plans for a regional milk promotion program under which all phases of milk production (the farmers, processors and retailers) would work together on a campaign to boost sales.

Heckman said that joining forces is designed, in part, to combat the sharp growth of the dairy industry in other parts of the country, including California, Idaho and New Mexico.

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