Special Report: Chenango, Otsego, Delaware economies losing $100 million plus in milk production

By Kenneth A. Smith

Executive Director,

Cornell Cooperative Extension of Chenango County

NORWICH – The loss of dairy farms and declining milk production Chenango, Otsego and Delaware counties is costing more than $100 million per year in lost economic impact in the region, according to data from the United States Department of Agriculture.

In Chenango County alone, the loss of over 100 dairy farms since 1999 is costing the county more than $30 million per year. In 1999, approximately 285 dairy farms in Chenango County produced 350.7 million pounds of milk. Twelve years later in 2010, after losing more than 100 dairy farms, Chenango County produced only 246 million pounds of milk. The 2012 value of the lost milk production alone was over $20.3 million, but there is an even greater loss of $33.9 million in overall economic impact (the impact of money dairy farmers spend in the community on things like labor, fuel and equipment, and which is then re-spent in the community).

Like Chenango, neighboring Otsego and Delaware counties have also experienced large declines in dairy economic impact due to falling milk production. Otsego County has lost $42.4 million in annual economic impact (based on 2012 milk prices) resulting from a decline of 131 million pounds of annual milk production compared to 1999. Delaware County has lost $35.3 million in annual economic impact resulting from a decline of 109 million pounds of milk per year compared to 1999.

Statewide, Otsego, Delaware, and Chenango rank one, two and three respectively in terms of the greatest losses in dairy production and economic impact. The total loss of milk production in the three counties amounts to about 17 tanker trucks per day. It is worth noting that this loss in dairy production is equal to about one quarter of the daily milk needs of the nearby Chobani yogurt plant which has had trouble finding sufficient milk to meet its needs. Chobani has stated that it would have increased the production capacity of its yogurt plant (and presumably the number of jobs there) further had more milk been readily available.

Though Otsego, Delaware and Chenango counties have suffered the greatest losses in dairy production, they are not alone. Nearly half of New York’s 45 dairy counties experienced declines in milk production between 1999 and 2010, and all of the counties in the southeastern New York have lost dairy production.

The explanation of why Chenango County and many other New York counties have seen declining milk productions while other counties have had growth, and in some cases very strong growth, has to do with farm size. In recent years, market forces and economy of scale have provided some advantages for larger dairy farms. In western New York counties, such as Cayuga, Genesee, and Wyoming, where topography and soils are favorable for development of large farms with as many as 2,000 or 3,000 cows, growth in milk production has been strong. In parts of the State such as Chenango, Otsego, and Delaware, where topography and soils favor smaller “hill farms” of under 200 cows, production of milk has been in decline.

As challenging as the past decade or so has been for dairy farming in places like Chenango County, there is evidence that a turn-around is possible. Studies by Cornell and by Farm Credit (the leading agricultural lender in our region) show that smaller dairy farms can be profitable in our region, particularly dairies that graze their cows. Wisconsin, which suffered similar problems with declining milk production, turned its milk production around in 2004 with a dairy strategic plan that supported growth of all sizes of dairy farms.

Turning around Chenango County’s declining farm numbers and milk production has been an important goal of the Chenango County ag community and the Chenango County Board of Supervisors. The supervisors have supported dairy programming through the Soil and Water Conservation District, Cornell Cooperative Extension of Chenango County, the Ag Development Council, the Ag and Farmland Protection Board, Development Chenango, and other initiatives. Most recently the Chenango County Board of Supervisors became the first entity in the state to ask Governor Cuomo to develop a statewide dairy strategic plan to help New York’s dairy industry. A dairy strategic plan was a key factor in turning around Wisconsin’s declining dairy production in 2004.

One significant source of help for Chenango County farmers would be if New York were to follow the example of Wisconsin and provide a strategic plan to help dairy farmers of all sizes make their farms profitable and sustainable. Such a plan would coordinate efforts from organizations such as NYS Ag and Markets, Empire State Development, dairy cooperatives, Pro Dairy, Cornell Cooperative Extension, dairy manufacturers and Farm Bureau to develop approaches such as profitability teams, planning and modernization teams that could help reinvigorate dairy farming around New York State. A New York State Dairy strategic plan could be the first step to help Chenango, Otsego, Delaware and other counties regain their lost dairy income.

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