Analysis of closed versus operating dairies in the southeastern United States

This study analyzed differences between dairies that have closed compared with dairies still operating in the southeastern United States. Significant changes have occurred in the US dairy industry in the last decade, involving the number of dairy farms, herd size, milk quality, and management practices, yet the dairy industry remains the fourth leading agricultural sector in the United States, with $38 billion of milk sales in 2017. Although the number of dairy cows in the United States has remained relatively constant over the past decade, at approximately 9 million head, the number of dairy operations has decreased by 30%, resulting in larger dairies. This trend is even more prevalent in the southeastern United States, where the number of dairies has decreased by 39% from 5,315 in 2008 to only 3,235 in 2017. Additionally, downward pressure on bulk tank somatic cell count, which is used as a milk quality metric and has implications regarding animal health, intensified with US processors' introduction of incentive and penalty systems for quality milk production, necessitating better management of mastitis in dairy herds. In this context, this study examines factors that affect southeastern US dairy farms' persistence in the industry by using primary survey data collected in 2013 through a mail survey of Grade A dairies in Georgia, Mississippi, Kentucky, North Carolina, South Carolina, Tennessee, and Virginia. Dairies that were no longer operational had exited the industry from 2007 through 2014. A probit regression was used to determine which farm and operator characteristics were associated with the dairy's operational status. Dairy farms with more cows and higher average milk production per cow were more likely to be operational. For an additional 10 kg/d of milk production per cow, the dairy was 1.5% more likely to be operational. For each 100 additional cows a dairy had, it was 4% more likely to be operational. The analysis also identifies nonpecuniary determinants of operational status for southeastern US dairies, such as mastitis management practices. Findings suggest that operations capable of leveraging scale effects are more likely to remain operational, with results affirming the consolidation of the US dairy industry and demonstrating that more productive farms are more likely to stay in operation. Results also suggest that factors other than farm size affect a dairy's operational status.