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Perdue addresses question of consolidation in dairy industry

Agriculture Secretary offers comments related to small versus large dairy farms and notes economy of scale will influence future industry structure.

A number of headlines circulating out of the World Dairy Expo have focused on comments supposedly made by U.S. Agriculture Secretary Sonny Perdue regarding the demise of small dairy farms.

Perdue did comment on the industry’s structure during a press event immediately following a townhall with dairy producers on opening day of expo. Among the questions asked was one related to consolidation in the dairy industry.

Feedstuffs was front and center at that press conference and recorded what was asked by the reporter and Perdue’s response. It is a short clip; take a listen for yourself.

We’ve also done our best to transcribe that part of the press event for you, as follows:

REPORTER: We've seen the loss of a lot of small dairy farms. Do you think the loss of small dairy farms is inevitable, or is there something that can be done to stem the flow of that?

SECRETARY PERDUE: No, I think the 2018 farm bill will stem the flow of that. Now what we see, obviously, is economy of scale having happened in America: Big get bigger, and small go out. That's kind of what we've seen here. It's very difficult on an economy of scale with the capital needs and all the environmental regulations and everything else today to survive milking 40, 50, 60 or even 100 cows, and that's what we've seen. What we've seen is the number of dairy farmers go out, but the dairy cows haven't reduced that much. Those cows are not going to slaughter. They've gone into someone else's herd, for the most part, in that way. And ... that just increases the supply of milk, which makes the supply demand balance even exacerbated in that way, but again, I think more dairy farmers will be able to survive with a 2018 farm bill and its risk mitigation measures.

REPORTER: But are they going to survive as they have in the past as small operations, or are they going to have to get big or get out?

SECRETARY PERDUE: That remains to be seen. Everyone will have to make their own decisions economically whether they can survive. I don't think in America, we, for any small business, have a guaranteed income or guaranteed profitability of survival. That depends on each and every farmer and dairy farmer. Farmers are pretty good at managing and managing through tough times. I think those that survived through the 2014 farm bill should do well in the 2018 farm bill.

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