Source: MICHIGAN STATE UNIV submitted to NRP
ASSESSING THE ECONOMIC PERFORMANCE, SUSTAINABILITY, AND COMPETITIVENESS OF THE MICHIGAN DAIRY INDUSTRY
Sponsoring Institution
National Institute of Food and Agriculture
Project Status
COMPLETE
Funding Source
HATCH
Reporting Frequency
Annual
Accession No.
1004301
Grant No.
(N/A)
Cumulative Award Amt.
(N/A)
Proposal No.
(N/A)
Multistate No.
(N/A)
Project Start Date
Nov 1, 2014
Project End Date
Oct 31, 2019
Grant Year
(N/A)
Program Code
[(N/A)]- (N/A)
Recipient Organization
MICHIGAN STATE UNIV
(N/A)
EAST LANSING,MI 48824
Performing Department
Agricultural, Food, & Resource Economics
Non Technical Summary
Agriculture today must be sustainable in three dimensions: economically, environmentally, and socially. This research project exists at the intersection of these dimensions to inform and educate managers and policy-makers about sustainable agriculture. Economically sustainable means generating sufficient returns to the unpaid factors of management, labor and capital to remain in agriculture over time. Environmentally sustainable is more difficult to define as it evolves with our understanding of the effects agricultural activities have on natural systems along with the ever advancing technology sets utilized. Part of the difficulty in managing a farm in the 21st century is the moving target that is environmental law. Socially sustainable is also of ever-increasing importance and reflects societal opinions and values relative to agricultural production practices. One important example of this is consumer demand for animal welfare practices. This project will research the economic and policy implications of these three aspects of modern dairy farm management.
Animal Health Component
90%
Research Effort Categories
Basic
10%
Applied
90%
Developmental
(N/A)
Classification

Knowledge Area (KA)Subject of Investigation (SOI)Field of Science (FOS)Percent
60160303010100%
Knowledge Area
601 - Economics of Agricultural Production and Farm Management;

Subject Of Investigation
6030 - The farm as an enterprise;

Field Of Science
3010 - Economics;
Goals / Objectives
1. Assess the current structure of the Michigan dairy industry (e.g., size, financial position, production practices, facilities, technologies, land tenure and cropping patterns, management practices).2. Assess recent trends in organization, production technology, labor, and management practices on Michigan dairy farms.3. Determine the interrelationships among and relative importance of social, economic, environmental, technological, and political environments, regional conditions, and entrepreneurial strategies affecting restructuring of the dairy industry.4. Identify strengths and competitive advantages of the Michigan dairy industry.5. Examine the impacts of the Dairy Margin Protection Program on Michigan dairy farms.6. Conduct financial analysis, develop financial and management strategies, and design industry-wide studies to improve the economic performance and competitiveness of the Michigan dairy industry.7. Examine the impacts of environmental regulation on Michigan dairy farms.8. Examine the adoption of animal welfare related practices on Michigan dairy farms.
Project Methods
The current structure and competitive position of the Michigan dairy industry will be assessed utilizing the Dairy Farm Business Analysis data. The interdisciplinary nature of the work will require many collaborators.Benchmarking farm financial performance will be assessed using the dairy farm analysis summary data. Stability measures, trends and implications will be assessed using methods that have traditionally been used to assess the performance of mutual fund managers. Monte carlo analysis will fill in where necessary.The examination of the structure of the Michigan dairy industry will also include regional comparisons that will further illuminate the competitive situation of dairy farming in Michigan. The environment that the dairy industry operates in will be examined using basic supply and demand models.Risk management practices and strategies for dairy farmers will be assessed using surveys of dairy farmers and cooperatives. Analytical models will be used to examine dynamic implications. The new dairy margin protection program will be assessed using similar methods. Of particular interest is the extent to which the new program may substitute for private risk management practices.

Progress 11/01/14 to 10/31/19

Outputs
Target Audience:Farm managers, agrbusinesses, ag lenders, state and national policy-makers Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided?Classes, seminars and in-service opportunities were provided for students, farm managers, agribusinesses and Extension personnel. How have the results been disseminated to communities of interest?Journal articles, popular press articles, presentations, seminars, and interviews. What do you plan to do during the next reporting period to accomplish the goals? Nothing Reported

Impacts
What was accomplished under these goals? Research, outreach, and education was provided to the dairy industry to address decisions related to labor management, financial management, investment, dairy margin protection anda dairy margin coverage programs. Dairy farm business management and land value reports were published. Research was completed to understand the causes and consequences of excess milk production and lack of dairy manufacturing capacity in Michigan.

Publications

  • Type: Journal Articles Status: Published Year Published: 2018 Citation: Polzin, L., C. Wolf, and J. Black. Accelerated tax depreciation and farm investment: Evidence from Michigan. Agricultural Finance Review 78( May 2018):364-375.
  • Type: Journal Articles Status: Published Year Published: 2019 Citation: Lai, J., N.J. Widmar, and C.A. Wolf. Dairy Farm Management Priorities and Implications. International Food and Agribusiness Review 22(January 2019):15-30.
  • Type: Journal Articles Status: Published Year Published: 2018 Citation: Hadrich, J., C. Wolf, J. Lombard, and T. Dolak. Estimating milk yield and value losses from increased SCC scores on U.S. dairy farms. Journal of Dairy Science 101(April 2018):3588-3596.


Progress 10/01/17 to 09/30/18

Outputs
Target Audience:Farmers, agricultural lenders, agribusinesses, policy makers (state and federal), extension educators, and academic colleagues in the US and abroad. Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided?Undergraduate and graduate students trained in these topics and methods. MSU Extension educators and policy-makers were involved in studies and results. Students and colleagues from Purdue, Cornell and Wisconsin were included in collaboration, research, and outreach programming. How have the results been disseminated to communities of interest?Results communicated through academic and industry press as well as conferences and educational programs throughout Michigan and the US. Also in journal articles and popular press. What do you plan to do during the next reporting period to accomplish the goals?Further work on dairy farm welfare-related production practices. Consumer perceptions and implications for dairy demand.Farm financial bench-marking methods and use in management decisions.

Impacts
What was accomplished under these goals? Dairy farm financial performance based on profitability, solvency and liquidity was assessed. Farm financial stress analyzed and financial resiliency was measured. The consequences and implications of poor milk basis in Michigan reflecting dairy processing capacity issues analyzed and communicated to stakeholders. Dairy cattle welfare practices and programs assessed in the context of public perceptions and demand for these practices. Dairy farmer supply of cow-welfare related practices examined.

Publications

  • Type: Journal Articles Status: Published Year Published: 2018 Citation: Ortega, D. and C. Wolf. Demand for Farm Animal Welfare and Producer Implications: Results from a Field Experiment in Michigan. Food Policy 74(January 2018):74-81.
  • Type: Journal Articles Status: Published Year Published: 2018 Citation: Hennessy, D. and C. Wolf. Asymmetric Information and Externalities in Animal Disease. Journal of Agricultural Economics 69:(February 2018):226-242.
  • Type: Journal Articles Status: Published Year Published: 2018 Citation: Hadrich, J., C. Wolf, J. Lombard, and T. Dolak. Estimating milk yield and value losses from increased SCC scores on U.S. dairy farms. Journal of Dairy Science 101(April 2018):3588-3596.
  • Type: Other Status: Published Year Published: 2018 Citation: Wolf, C. The Modified Margin Protection Program for Dairy Producers: Implications for Michigan Dairy Farmers. MSU Ag. Econ. Staff Paper 2016-01. March 2018.
  • Type: Other Status: Published Year Published: 2018 Citation: Wolf, C. Demand for animal welfare will impact your milk check. Hoards Dairyman August 25, 2018.
  • Type: Conference Papers and Presentations Status: Published Year Published: 2018 Citation: Wolf, C. Michigan Milk Check Economics. Great Lakes Regional Dairy Conference. Mount Pleasant, MI. February 8, 2018.


Progress 10/01/16 to 09/30/17

Outputs
Target Audience:Farmers, ag lenders, agribusinesses, policy makers (state and federal), extension educators, and academic colleagues in the US and abroad. Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided?Undergraduate and graduate students trained in these topics and methods. MSUE and policy-makers involved in studies and results. How have the results been disseminated to communities of interest?Results communicated through academic and industry press as well as conferences and educational programs throughout Michigan and the US. Also in journal articles and popular press. What do you plan to do during the next reporting period to accomplish the goals?Further work on dairy farm welfare-related production practices. Consumer perceptions and implications for dairy demand. Farm financial bench-marking methods and use in management decisions.

Impacts
What was accomplished under these goals? Dairy farm financial performance based on profitability, solvency and liquidity wasassessed. Farm financial stress analyzed and a financial stress calculator demonstrated. The consequences and implications of poor milk basis in Michigan reflecting dairy processing capacity issues analyzed and communicated to stakeholders. Dairy cattle welfare practices and programs assessed in the context of public perceptions and demand for these practices. Dairy farmer supply of cow-welfare related practices examined.

Publications

  • Type: Journal Articles Status: Published Year Published: 2017 Citation: Widmar, N., C. Morgan, C. Wolf, E. Yeager, and C. Croney. U.S. Resident Perceptions of Dairy Cattle Management Practices. Agricultural Sciences. 8(July 2017):645-656.
  • Type: Journal Articles Status: Published Year Published: 2017 Citation: Thompson, N., N. Widmar, M. Shutz, J. Cole and C. Wolf. Economic considerations of breeding for polled dairy cows versus dehorning in the United States. Journal of Dairy Science. 100(June 2017):4941-4952.
  • Type: Journal Articles Status: Published Year Published: 2017 Citation: Wolf, C. and G. Tonsor. Cow Welfare in the U.S. Dairy Industry: Willingness-to-Pay and Willingness-to-Supply. Journal of Agricultural and Resource Economics. 42(May 2017):164-179.
  • Type: Journal Articles Status: Published Year Published: 2017 Citation: Hadrich, J., C. Wolf, and K. Johnson. Characterizing U.S. Dairy Farm Income and Wealth Distributions. Agricultural Finance Review. 77(2017):64-77.
  • Type: Book Chapters Status: Published Year Published: 2017 Citation: Wolf, C. and N.J. Widmar. Benchmarking Dairy Farm Financial Performance. Large Dairy Herd Management. 2017.
  • Type: Other Status: Published Year Published: 2016 Citation: Wittenberg, E. and C. Wolf. 2015 Michigan Dairy Farm Business Analysis Summary. MSU Ag. Econ. Staff Paper 2016-02. October 2016.


Progress 10/01/15 to 09/30/16

Outputs
Target Audience:Dairy farm managers, dairy cooperative management, dairy processors, state and national policy-makers. Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided?Undergraduate and graduate students trained in these topics and methods. MSUE and policy-makers involved in studies and results. How have the results been disseminated to communities of interest?Results communicated through academic and industry press as well as conferences and educaitonal programs throughout Michigan and the US. What do you plan to do during the next reporting period to accomplish the goals?Further work on dairy farm welfare-related production practices. Consumer perceptions and implications for dairy demand. Farm financial benchmarking and use in management decisions. MPP-dairy and other policy instruments and their role in dairy farmer risk management programs.

Impacts
What was accomplished under these goals? Dairy farm financial performance based on profitability, solvency and liquidity assessed. Farm financial stress analyzed. The consequences and implications of poor milk basis in Michgian reflecting dairy processing capacity issues analyzed and communicated to stakeholders. MPP-dairy educational programs and decision-analysis conducted throughout the state and US. Dairy cattle welfare practices and programs assessed in the context of public perceptions and demand for these practices. Dairy farmer supply of cow-welfare related practices examined.

Publications

  • Type: Journal Articles Status: Published Year Published: 2016 Citation: Wolf, C., G. Tonsor, M. McKendree, D. Thomson and J. Swanson. Public and farmer perceptions of dairy cattle welfare in the United States. Journal of Dairy Science 99(July 2016):5892-5903
  • Type: Other Status: Published Year Published: 2015 Citation: Wittenberg, E. and C. Wolf. 2014 Michigan Dairy Farm Business Analysis Summary. MSU Ag. Econ. Staff Paper 2015-08. December 2015.
  • Type: Other Status: Published Year Published: 2015 Citation: Wolf, C. and M. Bozic. Case Studies with MPP-Dairy Financial Stress-test Calculator: Dealing with Declining Milk Price Basis in Michigan. Program on Dairy Markets and Policy Decision Guide 15-06. November 2015.
  • Type: Other Status: Published Year Published: 2015 Citation: Wolf, C. and M. Bozic. MPP-Dairy Financial Stress-test Calculator: A Users Guide. Program on Dairy Markets and Policy Decision Guide 15-01. August 2015.
  • Type: Other Status: Published Year Published: 2016 Citation: Stephenson, M. and C. Wolf. Is bigger necessarily better? Hoards Dairyman Intel. Feb. 29, 2016.
  • Type: Conference Papers and Presentations Status: Published Year Published: 2016 Citation: Wolf, C. Public and Farmer Perceptions of Cattle Welfare in the United States: Implications for Demand and Policy. Center for Animal Welfare Science Symposium. May 18, 2016. West LaFayette, IN.


Progress 11/01/14 to 09/30/15

Outputs
Target Audience:US dairy farm managers, US dairy cooperatives, processors and agribusinesses, State and Federal policy makers, State and Federal agency policy implementers Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided?Inservice trainings were held in Michigan for Extension educators. How have the results been disseminated to communities of interest?Several reports, articles and papers were published as described in the "Products" section. What do you plan to do during the next reporting period to accomplish the goals?Continued work on farm financial management, risk management, the Dairy Margin Protection Program and animal welfare.

Impacts
What was accomplished under these goals? Farm business analysis summaries and Benchmarking Reports were published and presented for Michigan dairy farm financial performance. The Actual Dairy Production Margin, which is the measure of dairy income over feed costs in the new Dairy Margin Protection Program, was assessed as an indicator of dairy farm financial profitability, solvency and liquidity and found to be a solid indicator of profitability. Meetings were held to assist Michigan and Indiana dairy farmers in risk management decisions related to dairy margin over feed cost risk management. US public and producer assessment of views and preferences for dairy animal welfare was assessed and published along with presentations on management and policy implications.

Publications

  • Type: Journal Articles Status: Published Year Published: 2014 Citation: olf, C., A. Novakovic, M. Stephenson, and W. Knoblauch. Indicators of Dairy Farm Financial Condition as Policy Triggers. Journal of Agribusiness 32(Fall 2014)127-143.
  • Type: Journal Articles Status: Published Year Published: 2014 Citation: Wolf, C. and N. Olynk Widmar. Dairy Farmer Adoption of Forward-Pricing Methods. Journal of Agricultural and Applied Economics 46(November 2014):527-541.
  • Type: Other Status: Published Year Published: 2014 Citation: Wittenberg, E. and C. Wolf. 2013 Michigan Dairy Farm Business Analysis Summary. MSU Ag. Econ. Staff Paper 2014-06. December 2014.
  • Type: Conference Papers and Presentations Status: Published Year Published: 2015 Citation: Wolf, C., W. Knoblauch, M. Stephenson, and A. Novakovic. The Actual Dairy Producer Margin and Financial Performance. 22nd Annual National Workshop for Dairy Economists and Policy Analysis. April 30, 2015. Portland, OR.
  • Type: Other Status: Published Year Published: 2014 Citation: Wittenberg, E. and C. Wolf. 2013 Michigan Cash Grain Farm Business Analysis Summary. MSU Ag. Econ. Staff Paper 2014-07. December 2014.
  • Type: Other Status: Published Year Published: 2015 Citation: Wolf, C., G. Tonsor, M. McKendree, D. Thomson, and J. Swanson. U.S. Dairy Farmer Welfare Perceptions and Attitudes: Survey Summary. MSU AFRE Staff Paper 2015-04. July 2015.
  • Type: Other Status: Published Year Published: 2015 Citation: Wolf, C., G. Tonsor, L. Polzin, M. McKendree, D. Thomson, and J. Swanson. U.S. Public Dairy Cattle Welfare Perceptions and Attitudes: Survey Summary. MSU AFRE Staff Paper 2015-03. July 2015.