Production agriculturalists have long focused on supplying abundant low-cost food to their customers. The advent of the U.S. ethanol industry has created upward pressure on commodity prices, which is particularly affecting the broader animal protein industry. In order to maintain affordable meat and dairy products to consumers, consolidation and innovation is taking place across all levels of the supply chain.
In the U.S. dairy production industry, this is primary being realized in the form of fewer, larger mega-dairies that are able to leverage their resources in order to attain lower production costs. Construction of these dairies is mostly occurring in non-traditional, sparsely populated locations in the states of Idaho, Arizona, New Mexico, Texas, Indiana, and Ohio. Despite having a higher cost structure, the Northeast dairy production industry has maintained its competitive advantage by enjoying close access to the some of the largest and most affluent population centers in the world. Moreover, with the advent of higher commodity prices, the Northeast is actually on a more level playing field than it has been in several decades from a dairy cost standpoint. Moreover, the Northeast is currently experiencing a "boom" in terms of new dairy processing plant capacity. Over the next decade, there is a tremendous opportunity to grow Northeast dairy industry. But in order to take advantage of these growth opportunities, the Northeast dairy industry will need the following:
- A higher level of Farm Management
- Capital to support and facilitate opportunities to grow and strengthen the Northeast milk supply
- Vehicles for growth, transition and transfer of production units
- Tools to effectively manage and transfer price volatility risk
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