Competitiveness of management-intensive grazing dairies in the mid-Atlantic region from 1995 to 2009

This paper used farm income tax returns (Schedule F) data from 62 dairy farmers who milked 200 cows or fewer in western and central Maryland and southwestern Pennsylvania (hereafter, the mid-Atlantic region) to assess the relative financial performance of management-intensive grazing (MIG) and confinement dairy operations over the 15-yr period from 1995 through 2009. Data were not available from all farmers in all years; on average, the sample analyzed contained 11 MIG farms and 26 confinement farms. Management-intensive grazing operators were more profitable on a per hundredweight, per cow, and per acre basis, and no less profitable on a whole-farm basis. Even though the confinement operators had higher gross income than MIG operators, their expenses exceeded those of MIG operators. Profits of MIG operations were less variable as well, so that MIG operators faced less income risk. Increased reliance on grazing has other benefits as well. Grazing seems to be a much healthier practice for dairy cows. Veterinary, breeding, and medicine costs per cow are much less for cows that are pastured than those raised in confinement systems. Because they are healthier, cows that are grazed can be milked longer (or culled less frequently). As a result, MIG operators have a larger number of higher quality animals for sale (e.g., bred heifers). Management-intensive operations are also less labor intensive. Reductions in crop production and in the time cows spend in the barn led to significant reductions in field work and cleaning operations in the barn. Costs of hired labor were thus substantially lower in MIG operations than in confinement operations. Land requirements likely impose the principal limitation on the size of intensive grazing operations. In the mid-Atlantic, for instance, grazing operations need 1.5 to 2.0 acres of pasture for every dairy cow/calf equivalent to provide sufficient grass to support a dairy operation. Pasture land for MIG operators must be contiguous to the milking parlor and located no farther than a cow can walk to and from twice a day. That requirement likely limits the maximum size of an intensive grazing operation, especially in areas where land prices and rents are high, as they are in much of the mid-Atlantic.