Better Labeling Could Help Spur Fluid Milk Sales
HARRISBURG, Pa. — Pennsylvania’s dairy farms could be more efficient with improved facilities, while at the same time, processors and retailers could do more to promote the milk label in stores.
These are two of the most significant findings the Center for Dairy Excellence is banking on to steer its future programming and decision making after a yearlong attempt to gauge the state of dairy in the Keystone State.
Among other findings from the dairy futures analysis that the center revealed Tuesday at its annual partners meeting at the Pennsylvania Farm Show Complex: 50 percent of dairy farmers were confident of meeting their profit goals in 2012, while most dairy farmers cited “no desire to expand” as the No. 1 limiting factor to increasing the size of their operations.
The meeting also featured visits from state Secretary of Agriculture George Greig and Gov. Tom Corbett, who lauded recent bills on inheritance tax exemptions for farmers and changes to the state’s transportation law as things he sees as critical to growing agriculture in the state.
Several universities, including Penn State, Saint Joseph’s University and the University of Pennsylvania, took part in the center’s study, which looked at historical production and consumer trends along with surveying dairy farmers about their operations and future goals.
The objective of the study, according to John Frey, the center’s executive director, was to get an overall sense of where the industry stands and how it could steer the center’s objectives in the future.
The center sent out surveys to 5,500 dairy farms in August, with 1,100 surveys sent back, most of those from Lancaster County, the state’s biggest dairy county.
They found the average dairy farm consisted of 99.4 cows and was 285 acres in size. The average cow produces 68.8 pounds of milk per day and 20,000 pounds of milk a year.
Alan Zepp, risk management program coordinator, said half of dairy farmers surveyed said they were confident in meeting their profit goals, while 14 percent were not.
Another question gauged the biggest deterrent to expanding their operations. No desire to expand was the biggest deterrent, followed by lack of available land, spending time with the family and access to labor.
When it came to things they could do to improve the bottom line, farmers cited the ability to grow their own feed, getting a better milk price and decreasing costs of production as things they would do, rather than increasing milk production or growing their herd size.
“That surprised me a bit,” Zepp said.
The survey also found cow comfort, improved housing facilities, and better feed holding and manure handling as the most common reasons for improving facilities.
David Galligan, professor of animal health economics at the University of Pennsylvania, analyzed economic trends in the dairy industry. Something he found that might not be too surprising to many is that for the most part, Pennsylvania is made up of mostly small dairy farms.
“Pennsylvania is dominated by small herds. It’s dominated by smaller herds relative to other neighboring states,” Galligan said.
Feed costs, he said, is the biggest factor affecting profitability, and farms with larger herds were generally better able to handle higher feed costs because of the economy of scale.
But it doesn’t mean smaller farms can’t do well. Galligan said increasing rolling herd averages and reducing somatic cell counts can greatly improve profitability for smaller dairies.
“I think it shows tremendous opportunities and gains for the industry,” Galligan said. “I think milk per cow is a critical aspect of profitability. Getting better is essential. Getting bigger is optional.”
Even though fluid milk sales are down, John Stanton, professor of food marketing at Saint Joseph’s University, said the industry could benefit by just improving its labels on a gallon of milk.
Stanton conducted a survey of 1,500 randomly selected consumers who were asked to analyze current milk labels and others with various claims to see whether it would have any impact on their decision to buy the product.
Regardless of the claim, any label with more information on milk, he said, was favored over a plain label with only the processor or store name on it.
He said one woman he talked with said current milk labels reminded her of Siberia, “white and cold.”
But different claims did make a difference in whether a consumer would be willing to buy milk, even if it was more expensive.
Claims such as “100 percent fresh” and “made from a local farmer” stood out more than claims about organic or whether hormones were used to produce the milk.
Stanton said milk processors and retailers should invest in better labels that promote the positive aspects of milk.
“Take a look at Coke. Take a look at the fruit beverages. Now they have the labels, but milk has the benefits. Consumers have to be constantly reminded of this,” Stanton said. “We need to have our labels shout out the benefits of milk. The label has more exposure than any paid advertisement you can get.”
Based on the results of the analysis, Frey said the center will push more messaging about cow production along with programs to support next-generation farmers and ways of promoting risk management.
He said the fact that the state still has good infrastructure for dairy, a slower attrition rate compared with neighboring states, good youth programs and good management at the farm level has him confident about the industry’s future.
“I think the future of dairy in the state looks very bright,” Frey said.