Economic and Marketing Information
FOR INDIANA   FARMERS
Prepared by the Agricultural Staff of Purdue University, Lafayette, Indiana
June  30,   1965
Future of the Indiana Dairy Industry
by E. M. Babb, E. E. Carson  and K.  W. Kepner, Agricultural Economics
Nationally, milk production is
expected to exceed commercial demand through 1970. Thus, the continuation of government programs to
support producer price and income
will be necessary to maintain total
net farm income. Indiana dairy producers' competitive position compared to other areas of the country
is not expected to improve in the
next five years.
Consumption
Total milk requirements for 1970
are estimated at 128 billion pounds,
about 2.5 billion pounds more than
will be used in 1965. This is an increase of almost 0.5 percent annually.
Increased population and income will
tend to increase total milk consumption but dairy substitutes, changing
consumer tastes and lower farm uses
will tend to offset these increases. Per
capita civilian consumption in 1970
is estimated at 590 pounds annually,
down about 30 pounds from 1965. Total milk uses expected in 1970 are:
total domestic consumption, 125 billion pounds; fed to calves, 2 billion
pounds; and net exports, 1 billion
pounds.
Milk consumption in Indiana, both
total and per person, should follow
closely the national trends. It has been
estimated that in the absence of the
support program, for each 10 percent increase in milk production,
prices received by producers for milk
would have decreased by about 30
percent, when other factors such as
population and consumer income are
held constant.
United States dairy exports find
few outlets abroad at prices comparable with domestic markets. This
is true not only because dairy product
prices in the world market are below
our domestic prices but also because
tariffs, quotas and other restrictions
limit the movement of United States
dairy products, along with those of
other exporters, into most of the major importing countries. Therefore,
United States dairy exports are almost
entirely dependent upon some type of
governmental   assistance   program.
Dairy imports into the United
States have nearly doubled since 1958
largely as a result of a 113 percent increase in the importation of nonquota products. However, the impact
of all dairy product imports on domestic markets is slight since these
imports are a relatively small portion
of total United States milk supplies.
Production
Milk production per cow for the
United   States  and   Indiana  has  in
creased rapidly and was 7,880 and
8,750 pounds respectively, in 1964.
Indiana's rate of increase per cow
has exceeded the U. S. average, particularly in the last 10 years. A Wisconsin study estimated that improved
genetics have accounted for 25 percent of this increase with better feeding and management practices accounting for the other 75 percent. It
is estimated that Indiana milk production per cow will be between 9,500
and 10,000 pounds and U. S. production per cow will average about
8,500 in 1970.
Based on projected production per
cow, about 15 million cows would be
required to produce the 128 billion
pounds of milk needed in 1970. This
means a drop of about 1.2 million
cows below 1965. Cow numbers in Indiana have been decreasing at a much
faster rate than for the U. S. (from
3.16 percent of the nation's milk cows
in 1950 to 2.43 percent in 1964). The
decline in cow numbers in Indiana
has more than offset increased production per cow so that total production has trended down since
World War II. U. S. milk production
has increased, so Indiana's share of
national production has dropped
from 3.18 percent in 1950 to 2.67
percent in 1964.