Journal and Herald, March 9, 1998

Commentary: the real cost of a moratorium on feedlots

By Harold Metzger, Plant Manager
Dairy Farmers of America, Winsted

A hot topic of discussion by the state legislature and in many counties these days in whether a moratorium should be imposed on livestock feedlots. Before imposing such drastic measures proponents should fully understand the negative impact of a moratorium on local and state economics.

When a moratorium is in place, no growth can occur. Any plans for expansion must wait for the moratorium to be lifted. Unfortunately, in a dynamic business undergoing change at the rapid pace of the dairy industry, the uncertainty of a moratorium is likely to have a devastating effect. Already the dairy industry is in rapid decline in Minnesota. a moratorium would create additional uncertainty making the problem even worse.

In Minnesota, our once robust dairy industry is already in decline. In 1997, alone the number of milk cows decreased by 20,000 head. According to a 1996 study by the Minnesota Department of Agriculture, Minnesota milk production has declined to the point that our state's dairy processing plants to the point that our state's dairy processing plants must import 4.1 million pounds of milk per day in order to maintain their operations.

Furthermore, Minnesota is 59,000 cows short of providing sufficient milk to meet the needs of local processing plants. If the trend continues, some plants may consider closing or relocating, resulting in loss of jobs and economic hardship to communities.

Consider the economic impact a dairy processing plant has on a community. The Dairy Farmers of America plant at Winsted for example, employs 120 people from the surrounding community and has a payroll in excess of $2 million. The plant processed milk from 400 dairy producers in a 100 mile radius.

Last year the Winsted plant processed more than 450 million pounds of milk and paid dairy farmers nearly $50 million, much of which returned to the community in the form of services, feed and farm supplies, fuel, utilities, bank loans, real estate and income taxes. In addition the plant paid more than $60,000 in taxes and license fees that benefited the state and community.

The 1996 Farm Business Management Education Annual Report estimates the average cost to the Minnesota economy when one farmer goes out of business is $257,162 per year. This money is used to pay other farmers, veterinarians, feed, seed and fertilizer, fuel, utilities, bank loans, real estate and income taxes, construction companies, schools, truckers, hardware and many other local businesses.

If the dairy industry is allowed to grow, the support businesses will grow with them providing more jobs. For example, a 1,100 cow dairy brings nearly $1.6 million per year to the local business community.

Certainly, the larger confinement operations need to grow responsibly and with concern for the environment. Dairy farmers across the nation are proving that large-scale dairies can be designed in such a way that they have minimal environment impact. Rather than establishing arbitrary limitations or moratoriums on our farmers, we need to work with dairy farmers to help them install waste management systems that protect the environment and allow them to make a positive contribution to the economy of our state and our communities.

Growth in the dairy industry must be supported by the state and local governments. Don't allow a moratorium to dictate whether or not the dairy industry remains a strong and vibrant part of the Minnesota economy ­ let's encourage our dairy industry to grow.


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