Herald JournalHoward Lake-Waverly Herald, Dec. 30, 2002

Declining dairy farms hit closer to home as Munson's cuts five

By Lynda Jensen

Five positions will be cut effective Jan. 1 at Munson Lakes Nutrition ­ the result of the declining number of dairy farms in the area, said General Manager Dave Pruess.

Three of the five are Howard Lake-based positions, with one Cokato position being cut, and another employee in Rice retiring and not being replaced, Pruess said.

Two of the positions are sales staff, including the Rice position, with the other three being manufacturing positions for feed production, he said.

The layoffs reflect declining numbers in dairy farmers, Pruess said. Munson's is downsizing its staff to be more efficient, he said.

"We've lost about half of our dairy farmers in Wright County over the past five years," Pruess said.

Numbers from the extension service reflect a decline in the industry, showing that there are 184 dairy herds in Wright County now, compared to 210 in 2000, said Meeker/McLeod Extension Agent Joe Neubauer.

Another set of figures shows there are 13,500 cows now, compared to 20,400 in 1992 for Wright County, Neubauer said.

The sales staff is being cut back because dairy farms are growing larger and this means fewer contacts for them to make, he said.

Munson's employs a total of about 29 people, with 24 of these being in Howard Lake, Pruess said.

The employees are doing OK, since they received a nice severance package, Pruess said.

In fact, some have discussed taking a few months off and looking for employment prospects in the spring, he added.

A 'quiet crisis' for dairy farmers

Minnesota dairy farmers are going through a "quiet crisis," according to the University of Minnesota Extension Service.

Steady decline describes dairy farm numbers during the past 30 years, according to studies from the extension service.

This is happening despite milk prices rising or falling, according to Jerome W. Hammond, professor emeritus in the Department of Applied Economics at the university.

Examination of statistics related to dairy farms show that even though dairy farm numbers are declining, milk production has stayed about the same, Hammond said.

The number of farms with fewer than 50 cows will decline to 22 percent of the total by 2005, while 18 percent of the state's farms will have 200 or more cows, Hammond said.

"Though continuing to decline in number, farms with 50 to 99 cows will still account for about one-third of the total number of dairy farms in Minnesota," he said.

The decline in farm numbers, however, hasn't resulted in a similar drop in milk production.

"The number of cows declined at an average annual rate of only 2.8 percent over the same period ­ and even that decline was offset by a 1.2 percent increase in the annual average milk production per cow," Hammond said.

"Thus, although Minnesota has fewer and fewer dairy farms, it produces about the same amount of milk as in the past," he said.

"It's the smaller farms (measured by the number of milking cows) that are disappearing the fastest," Hammond said.

"Since 1993, the number of farms with one to 29 cows declined at an average annual rate of 13.5 percent and today account for only 16.5 percent of all dairy farms. At the other extreme, farms with more than 200 cows, which currently account for 3.1 percent of all farms, increased by 33 percent annually during the period 1993 to 98," he said.

The disparity in per-farm production also stems from the higher milk productivity per cow on larger farms, Hammond said.

The average annual milk production per cow is lowest on farms with fewer than 30 cows (11,600 pounds of milk per cow per year); on farms with more than 100 cows, per-cow milk production increases to over 18,000 pounds per year, he said.

Other projections for 2005 suggest that while total milk production for the state will hold stable at about 9 billion pounds, important shifts will occur in the percentage of milk production contributed by each farm size group.

"In 2005, because of larger numbers of farms with more than 100 cows and because of higher productivity on larger farms, 56 percent of the state's milk will be produced on these farms. By 2005, only about 10 percent of the state's milk will come from farms having fewer than 50 cows," he said.

"Unless we see a return to high levels of federal price protection, Minnesota dairy farmers will continue to face highly volatile milk prices," he said.

This will encourage producers to use pricing strategies, such as long-term pricing contracts with milk buyers and direct use of futures markets for milk and dairy products, he said.

The trend will continue to perpetuate a shift from small single-family enterprises with little hired labor, to partnerships of several families, and to large dairy enterprises with regularly employed non-owner workers, he said.

"Communities will have to adjust, once again, to changes in their local agricultural economy," he said.

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