Economic Importance of Minnesota's Dairy Industry
I. Introduction to Minnesota's Dairy Industry
Dairy is an important industry in Minnesota's economy. The industry is a key component of agricultural systems in both the state and the nation. In fact, Minnesota is the nation's fifth largest milk- producing state. In 1997, Minnesota produced 6% of the total milk produced in the United States.1 This market share of total milk production has remained fairly stable over the past 7 years. Minnesota produced 7% of the total milk production in the United States in 1990 and 1991. After that, the percentage fell to 6% of total national milk production and has remained there.2
As illustrated in figure 1, 13% of the total value of agricultural production in Minnesota can be attributed to milk production in the dairy industry.3 The figure shows dairy is one of the largest agricultural sectors in Minnesota. Further, the dairy industry is the largest livestock sector in terms of value of production.4
Figure 2 shows the changes in dairy's value of production since 1990. The dollar figures in the graph have been adjusted for inflation.5 The graph reveals dairy's value of production has fluctuated over the time period. In general, it appears the overall value of dairy production is decreasing.
These changes in dairy's value of production can be compared to the value of production for all agriculture. Figure 3 displays the total value of production for agriculture in Minnesota for the years 1990-1997.
Figure 1. Value of Agricultural Production,
Minnesota 1997 |
 |
| Source: Minnesota Agricultural Statistics 1998 |
Also shown in figure 3 is the value of production for dairy. Both sets of values have been adjusted for inflation.6 Total value of agricultural production has been increasing in general since 1993.
| Figure 2. Dairy Value of Production, Minnesota 1990-1997 |
 |
| Source: Minnesota Agricultural Statistics 1998 |
The dairy industry in Minnesota has been experiencing rapid change in recent years. Figure 4 illustrates how dairy sales as a percentage of total farm sales have been decreasing since the early 1980s.7 Table 1 presents historical data on the number of dairy farms, the number of processing plants, the number of dairy cows, and the pounds of milk produced in Minnesota. These indicators have been decreasing since 1992. This trend of decreases in the dairy industry is expected to continue. Thus, we must give close consideration to the economic impacts of the dairy industry in Minnesota. We further need to question how the Minnesota economy will potentially be affected if the dairy industry continues to decline. This publication shows how the dairy industry affects employment and income in the Minnesota economy.
Figure 3. Agricultural Value of Production versus
Dairy Value of Production, Minnesota 1990-1997 |
 |
| Source: Minnesota Agricultural Statistics, 1991-1998 |
Figure 4. Dairy Sales, Percent of Total Farm Sales,
Minnesota 1980-1996 |
 |
| Source: Minnesota Agricultural Statistics |
Table 1. Dairy Facts, Minnesota 1992-1997 8
|
| Year |
Number of
Dairy Farms |
Number of
Processing Plants |
Number of Cows |
Pounds of
Milk* |
|
| 1992 |
14,600 |
N.A. |
675,000 |
9,854 |
| 1993 |
13,500 |
N.A. |
660,000 |
9,693 |
| 1994 |
12,600 |
24 |
620,000 |
9,342 |
| 1995 |
11,800 |
22 |
600,000 |
9,409 |
| 1996 |
10,900 |
22 |
600,000 |
9,440 |
| 1997 |
10,100 |
21 |
595,000 |
9,210 |
|
Source: Number of cows and pounds of milk from Minnesota Agricultural Statistics, 1994 and 1998.
Dairy farms and processing plants from American Farm Bureau Federation.
* Millions of pounds. |
|
Produced by Communication and Educational Technology Services, University of
Minnesota Extension.
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