Increasingly, children who grow up on a dairy farm are deciding not to stay in the business as adults, and that’s a key reason why nearly 5,000 farms have disappeared from Pennsylvania in the last 20 years. The trend confounds and distresses many farm parents, who often have no choice but to sell their assets to another farm, but Houser believes the main reason for the trend is obvious.

Most small dairies are self-sufficient, raising their own feed and heifers.

“Most kids are not returning to the farm because of the lifestyle they saw their parents lead, putting in 12 to 14 hours of hard work each day,” he says. “On the farm, there are no days off, and it’s awfully difficult for farm kids to see their classmates have every Saturday and Sunday off.”

Sixty percent of the state’s dairy farms are considered to be small, having 30 to 100 cows, with an average herd size of 58. With their weathered wooden barns, towering silos, and lush pastures, small dairy farms have long been a fixture of the Keystone State’s rural landscape. They have also been disappearing at an alarming rate. According to the Pennsylvania Department of Agriculture, the state has 9,600 commercial dairy farms, down from 14,500 in 1980.

The economic factors underlying the loss of farms are simple. “Some producers can get more milk from cows than others, and some can control costs better than others,” says agricultural economist Ken Bailey, who studies milk prices and other economic issues affecting Pennsylvania’s dairy industry. “The ones who can are getting bigger, and the ones who can’t are going out of business, so we have fewer farms each year. It’s a national trend that started after World War II, because of competition. But Pennsylvania is not losing farms any faster than other states.”

Jay (left) and his son, Jim, provide much of the labor on their farm, along with other family members.

In fact, Pennsylvania remains the nation’s fourth largest milk producer, after California, Wisconsin, and New York. In 2000, Pennsylvania generated 6.7 percent of the nation’s milk—11.16 billion pounds—with 617,000 dairy cows. However, the state ranks 12th in milk production rate, the measure of how much milk on average each cow produces, at 18,081 pounds per cow per year.

Pennsylvania’s geographic position creates some unique opportunities for producers. Because of the state’s proximity to population centers—60 percent of the nation’s population is within a day’s drive of Pennsylvania—much of Pennsylvania’s milk is sold as fluid. “That means Pennsylvania dairy farmers get higher prices for their milk than farmers in the Midwest, where most milk goes for cheese and other products,” Bailey notes.

That fact is one of many reasons the outlook for the dairy industry in Pennsylvania as a whole is extremely positive, but experts say smaller farms must adjust if they are to share in the industry’s bright future.

Large and small—and interdependent
For centuries, the sight of small, family farms has been a key component of the beauty of rural Pennsylvania. “If we lose all the small dairy farms, we would lose a piece of our heritage, a part of our culture,” says agricultural economist Jeff Hyde. “It would change the landscape of our state. Small, family farms are picturesque.”

Left: Jay Houser drives a tractor on his 540-acre farm. After nearly seven decades of farming, he says the key to success is "putting the cows first." Right: Mary Houser collects eggs in the henhouse. Penn-Dell Farm is truly a family affair, and she and Jay say they couldn't imagine succeeding any other way.

However, the survival of smaller dairy farms isn’t just a question of aesthetics, it’s a critical economic issue. “The state’s dairy industry needs all its farms, small and large alike, to survive,” says Alan Bair, the college’s director of dairy industry relations.

Without enough farmers, big and small, the state’s farm-service infrastructure—including tractor sales, parts and service, veterinarians, artificial inseminators, feed dealers, and agricultural finance institutions—won’t have enough business to prosper.

“Producers in northeastern Pennsylvania are already seeing the reduction of infrastructure,” says Bair. “They have to travel much farther for parts, service, and feed. And once the infrastructure leaves, it doesn’t come back.”

Vinton Smith, dairy management extension agent based in Adams County, has also seen evidence of the disappearing infrastructure in parts of Pennsylvania. He recently talked with a Tioga County dairy farmer who had to drive 200 miles to Lancaster to get a part for a piece of equipment. “Pennsylvania’s small farms are a vital part of the makeup of our industry,” Smith says. “We need that balance of small farms and large farms. If we only had a few large farms in our state, we wouldn’t have an infrastructure supporting farming.”

“The largest dairy producers in Pennsylvania are perhaps most concerned about the overall reduction in farms,” says Bair, “because they know that we must increase milk production as a region to keep the infrastructure and milk-processing plants here. And large farms can’t do it alone.”

The existing processing and marketing infrastructure in the Northeast has created an immediate demand for an additional 2 billion pounds of milk per year. “Milk processors will build their plants wherever the milk supply is, and Pennsylvania needs to produce more milk to keep the processing plants here. Otherwise, the plants will move to other regions, such as the West and Midwest.”

In short, the Northeast is desperately short of milk production, and that creates opportunities for all dairy farms, large and small. “Both small and large farms have the opportunity to increase milk production per cow and net farm income per cow,” observes dairy scientist Lisa Holden. “Pennsylvania producers have the opportunity to maximize their investment and make up much of the milk deficit in the Northeast.”

The high costs of facilities, such as the modern milking parlor at Doug Smith's Frosty Hollow Farm, can make it tough for small dairy farmers to compete.

Hyde urges small producers to think like owners of big businesses. “They need the same focus on business management and human resources that the large farms have,” he says. “My job is to help sharpen the business management skills of farmers, and the majority of those are small dairy farmers. One of my goals is to help them assess the costs and benefits of technology, such as robotic milkers—and ultimately to help them make more money.”

One secret of efficiency is for farmers to understand the return they are getting on their investments. For instance, it might not make sense for a farmer to raise feed if it can be purchased economically—instead, the farmer can devote time that would have been spent raising crops to the parts of the business that make more profit. “Farmers need to spend more time thinking about what they are getting back for the time and money they are spending,” he says. “Many small farmers spend so much time planting, milking, and raising cows that they don’t get the time to step back and ask themselves, ‘What does this mean for my business?’”

Those producers who do find ways to make their operations more efficient can prosper in the current market for milk products. “There are some pockets of very progressive, very successful farms in Pennsylvania that happen to be small,” notes Bailey. “There’s a great market out there, but it is unrealistic to expect any business to succeed by doing things the way it did 20 years ago.”

Houser is a believer in increased efficiency. His herd has been carefully bred for high production, and last year produced an average 29,000 pounds of milk per cow, far above the state average. “We couldn’t succeed if we didn’t put the cows and production first,” he says. “We want to ship as much milk per cow as possible—that’s our focus. We can’t afford an empty stall or a loafing cow.”