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By the numbers... Dairy's economic impact

Karen Anderson
Agricultural Extension Educator for Rice and Steele Counties
May 24, 2014

As dairy farmers, have you ever wondered if the job that you do has any impact on others? The idea of impact has multiple meanings and implications. The impact that I'm talking about is the strong effect or influence you have on another person. The impact that we have as agricultural producers has become vital as the majority of consumers become further removed from agriculture. However, it's not only consumers that dairy farmers have an impact on. The impact of the dairy farmer reaches far beyond what most realize, in areas such as job creation and sustainability and the overall economy.

It seems that as people differentiate their personal occupations, the universal understanding of agriculture has become quantitative. Are there numbers to back up what is being said or demonstrated? What impact is agriculture having on the economy? Now, I'm by no means an economist; however, through my career with University of Minnesota Extension, I have the opportunity to work with many different avenues of agriculture. To help answer these questions, the USDA National Agricultural Statistic Service has provided some insight through the 2012 Census of Agriculture. According to the USDA NASS 2012 Census of Agriculture Highlights of Farm Economics, thirteen states produced more than $10 billion in agricultural product sales in 2012 and together accounted for 62 percent of the total agricultural sales. Figure 1 - The Top States in Agriculture Sales, 2012 - shows that these thirteen states are predominantly located in the Midwest region of the U.S. We are very fortunate in the Midwest to have the land and resources available to operate many different types of agribusinesses. More specifically with dairy, Agricultural Census indicates that 2012 total sales value for milk totaled $35.5 billion. Milk is the third top livestock commodity by 2012 sales value following cattle and calves at $76.4 billion and poultry and eggs at $42.8 billion. In relation to how each individual state ranks, the top states that contribute most to the total sales value for milk in order of highest milk production include California, Wisconsin, Idaho, New York and Pennsylvania.

To put the impact of dairy into perspective, the Dairy Farming Today website produced a publication called The U.S. Dairy Industry, A Vital Contributor to Economic Development that indicates, "Dairies create a ripple effect on the agricultural economy and the economic well-being of rural America. When a dairy farmer sells a dollar of milk, it generates economic activity of $3, and every $1 million of U.S. milk sales generates 17 jobs." This impact is just one way to show that dairies across the U.S. are stimulating a sustainable economy through agricultural sales and jobs.

Now, let's look at how dairy impacts the economy of individual states within the area of Dairy Star readers. Figure 2 shows the 2012 Market Value of Milk from Cows Sold. Depending on the number of farms in each state, milk proves to be a vital stimulator of state's economy. For example: Wisconsin's milk sales accounted for over 42% of its total agricultural sales for the state. Additionally, milk ranked top 5 in each of the five states in comparison to the market value of other agricultural products such as cattle and calves, hogs and pigs, grains, oilseeds, dry beans and dry peas, etc. Each state is vastly different in topography and land available for agriculture.

Impact is the strong effect or influence you have on others. The dairy impact equation is simple. By producing milk, dairy farms influence the overall well-being of each state's economy and job sustainability. The sales from the products produced can play a smaller or larger role in each state's economies such as the difference between dairy sales in North Dakota versus Wisconsin. In the end, dairy farmers are a significant contributor to the $395 billion in agricultural products sold in 2012.

Table 1. Top states in agriculture sales, 2012 (more than $10 billion in sales).

($ billion)
% of U.S. Total
California 42.6 10.8
Iowa 30.8 7.8
Texas 5.4 6.4
Nebraska 23.1 5.8
Minnesota 21.3 5.4
Kansas 18.5 4.7
Illinois 17.2 4.4
North Carolina 12.6 3.2
Wisconsin 11.7 3.0
Indiana 11.2 2.8
North Dakota 11.0 2.8
South Dakota 10.2 2.6
Ohio 10.1 2.6
Total U.S. agriculture sales in 2012 = $394.6 billion. Source: USDA NASS, 2012 Censes of Agriculture.

Table 2. 2012 market value of milk from cows sold.

Iowa Minnesota North Dakota South Dakota Wisconsin
Number of farms 1,523 4,493 158 420 11,295
Sales $ 1,000 799,467 1,645,911 67,079 374,490 4,952,039
Rank of sales * 5 3 5 4 1
Total Ag Sales $1,000 30,821,532 21,280,184 10,950,680 10,170,227 11,744,476
% of total ag sales 2.6 7.7 0.6 3.7 42.2
*Rank of sales in a comparison with other Market Value of Ag Products for each individual state such as hogs and pigs, cattle and calves, grains, oilseeds, dry beans and dry peas, etc. Source: USDA NASS, 2012 Ag Census Publication – Ranking of Market Value of Ag Products Sold.
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