DAIRY ADJUSTMENTS IN THE NORTHEAST 



An Analysis of Potential Production and Market Equilibrium 



This study is concerned with the future competitive position among 

 dairymen in the Northeast and between the Northeast and other regions 

 of the country. The dairy industry in the United States is undergoing 

 more rapid change today than at any time in its history. The North- 

 east has shared in this change. Some of the underlying causal factors 

 are: (1) rapidly changing production and marketing technology, and 

 (2) a gradual change in consumer tastes. At the farm level this has 

 resulted in greater production per cow, more cows per farm, and 

 greater production per farm. In the aggregate, this has resulted in fewer 

 dairy farms, fewer workers, fewer cows, but more total milk produc- 

 tion. Introduction of new laborsaving technology has raised productiv- 

 ity per man, but at the same time has made it increasingly difficult for 

 smaller and less labor efficient farms to compete. Changes in the assem- 

 bly and marketing of milk also have occurred. Bulk tanks have come 

 into widespread use on the farm. Development of super highways has 

 facilitated the use of large tank trucks and reduced the cost of hauling 

 milk to market. Home milk delivery is giving way to distribution 

 through stores. The consumption of fluid milk, fluid cream, and butter 

 has been declining, while the demand for other dairy products has in- 

 creased. Reconstruction of whole milk, though still in the developmental 

 stage, promises to have an important impact on the industry. "Filled" 

 or "modified" milk as well as imitation "milk" are new products which 

 will affect the consumption of fluid milk. 



The rapidity with which these changes are taking place taxes the 

 ability of the dairy industry to adjust. Changes in technology and 

 demand do not affect all farms or all regions equally. A number of so- 

 called adjustment problems have arisen — a cost-price squeeze, low 

 farm incomes, surplus production in some areas, and deficit production 

 in others. 



Certain characteristics set apart the Northeast from other major 

 dairy-producing regions. Dairying is the major farm enterprise through- 

 out the region. Proximity to major urban areas has provided farmers in 

 the region with a ready market for milk. A complex pattern of State and 

 Federal marketing orders has grown up in the past three decades with 

 administrative methods varying from market to market. 



These conditions pose many questions concerning the future of 

 dairymen in the Northeast. The competitive position of dairymen can 

 be viewed from tliree levels: 



(1) Mterfarm competition: What farmers in an area will or should 

 continue to produce milk? 



(2) I ntr aregional competition: What areas within the Northeast 

 region have a competitive advantage or disadvantage? How is 



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