FOCUS ON AGRICULTURE: Missouri dairy industry output worth $7.7 billion to state economy

Posted: Mar. 27, 2013 2:13 pm Updated: Apr. 26, 2013 4:15 pm

Missouri's dairy product manufacturing and production industry revenues translated into annual statewide economic output worth $7.7 billion, contributing more than $2 billion to the state's gross domestic product and directly and indirectly supporting more than 23,000 jobs.

"Missouri's history as a major milk-producing state endowed us with a diverse dairy product manufacturing sector that remains a major employer," University of Missouri Extension Commercial Agriculture Program economists Joe Horner and Ray Milhollin wrote in a study for the Missouri Dairy Products Association.

The state's dairy product manufacturing industries directly employed 5,515 workers receiving average wages of $46,850 per worker to create a total statewide payroll of $258 million. Considering all the direct, indirect and induced jobs stimulated by Missouri's dairy product manufacturing industries, a total of 23,297 jobs were supported. These jobs provided $1.2 billion in labor income to Missourians.

Missouri's dairy manufacturing plants produced an estimated $4.4 billion worth of dairy products in 2011, the most recent year for which data was available.

The state's gross domestic product was $2 billion larger due to the value added by the dairy product manufacturing industries, which stimulated $138 million in state and local taxes to Missouri and $239 million in federal taxes in 2011.

"Missouri agriculture produces lots of commodities. What is different about Missouri's dairy industry is that our state's dairy processing industry transforms every drop we produce into higher-valued products," Horner said. "In addition, much of Missouri's dairy processing is owned by local dairy farmers through their cooperatives, allowing the farmers to capture the value they create."

The complete report is available online at


Farm bill and dairy

Dairy producers will seek a new safety net when farm bill discussions restart in Congress.

Current proposals look more like insurance than price programs of the past, but with financial binds in Washington, there are no easy answers, said Scott Brown of the University of Missouri Department of Agricultural and Applied Economics.

"With rapidly rising feed costs, dairy interest turned to a margin insurance plan," Brown said, and that's a shift by milk producers from years of price-support programs in the federal act.

One thing is certain: There will be less federal money for any new policy compared to past levels.

With scant money, any federal dairy policy might have little impact in helping producers hard hit by economic turmoil in recent years.

To put dollar power in focus, Brown did the math. Last year, USDA estimated 2012 dairy cash receipts at $37 billion. For the expected 10-year farm bill, the Congressional Budget Office lays out dairy spending at $28.4 million a year. Dairy spending compared to receipts is less than 1 percent. "An effective program is hard with such small annual outlays," Brown said.

Policymakers seek a balance that attracts producers to the program yet doesn't overspend federal dollars. If the first proposal fails, either way, that means reopening policy talks in 2014 or 2015.

"We should never lose sight that our goal is an adequate safety net for farmers," Brown said.


-- Compiled by Herald-Whig Staff Writer Deborah Gertz Husar