Is the time now for the region to increase its dairy production?

(Farm and Ranch Guide) – There has been a tremendous growth of milk production around the country over the last 50 years, largely concentrated in the western states. But not every region has enjoyed a “milk boom.”

In fact, North Dakota has experienced a decline in dairy operations over the years due to the volatility of market prices and rising production costs that are making small dairy farms extremely difficult to stay in business.

“Not all of the country is growing evenly, said Dr. Marin Bozic, assistant professor of Dairy Foods Marketing Economics from the University of Minnesota. “In fact, there are really only about 10 to 12 very concentrated areas where milk production is growing and the rest of the country is showing declines. So the question is, ‘can our region be one of those focal centers that does see an increase in milk production?’ And I believe we have a strong chance of achieving that.”

Bozic explained that drought conditions across the west and southwestern regions of the country have adversely affected dairy production in these regions as a result of less feed supplies and subsequently led to higher feed prices.

California, one of the nation’s biggest dairy producers, saw production drop over four percent in 2012. And with a dry weather pattern and above-average temperatures projected next year for these regions, it’s possible dairy production will continue to drop.

That could open the door of opportunity for states like North Dakota, South Dakota, Minnesota, Iowa and Nebraska to see a rebound in dairy production.

Already there are signs of growth.

“There is something called the I-29 corridor that is a five-state area from North Dakota, Minnesota, South Dakota, Iowa and Nebraska and we’ve seen a lot of cows move into that area,’’ Bozic said. “New plants are being built there. In fact, just about a couple of months ago Bel Brands (USA) announced they are going to build a new plant near Brookings, S.D., and that plant alone would suffice to absorb almost the entire annual production of North Dakota.”

North Dakota’s current dairy cow totals are 18,000 and 6,357 of which are enrolled in 29 DHIA (Dairy Herd Improvement Association) herds, according to the North Dakota Agricultural Statistics Serivce. There are 126 herds marketing milk, according to the ND Department of Agriculture.

Growth has centered around this particular region where Interstate 29 runs north-south. The question is can North Dakota be a part of that growth?

“I don’t have the answer to that, but it does seem to be the case that we will see a very small, isolated market near Bismarck for local population and if we do see a bigger growth, it might be the eastern border of the state along that I-29 Corridor,’’ he said.

There are some plans to bring stakeholders together to see what needs to be done to increase and encourage growth in this area.

With growing feed costs and increased volatility in shell corn, soybean meal and hay this might be an opportunity for the region because this is the part of the country where the feed is grown.

“It may make more sense to keep the cows where the feed is and when you talk to producers that are looking around the country where to locate their satellite dairies they are looking at our region and this may be the place to be, this is the place to come,’’ Bazic said.

Wayne Carlson, livestock development division director with the ND Department of Agriculture, agrees with Bazic that the potential is there for dairy growth in this region.

Of course, there are many challenges to overcome.

Price uncertainties and the high margins are making it difficult for expansion and new start-up operations.

Carlson said these are good times for agriculture, pointing to high commodity prices. However, some animal agriculture sectors, like dairy, are struggling due to volatile prices and margin ratios.