xt7gxd0qsz1m https://exploreuk.uky.edu/dips/xt7gxd0qsz1m/data/mets.xml   Kentucky Agricultural Experiment Station. 1965 journals 156 English Lexington : Agricultural Experiment Station, University of Kentucky Contact the Special Collections Research Center for information regarding rights and use of this collection. Kentucky Agricultural Experiment Station Progress report (Kentucky Agricultural Experiment Station) n.156 text Progress report (Kentucky Agricultural Experiment Station) n.156 1965 2014 true xt7gxd0qsz1m section xt7gxd0qsz1m - PROGRESS REPORT 156 BY JOHN B. ROBERTS T
w/     .- ·.·.· .   —.·-. . l
  af         BBB BB   IDA! RY!  ~  ·B· ··‘·‘····‘·B··:·:“·:·;Z·:·   .vBB T
  ·»._   U    REE; ;;·;»:_;: ' :;;;»:._. , H I ~   .4B_. ’ s  V 
  ' ‘‘   E 2,,/Q/""   ..;. · [7* 7
   §i_¥;§Y   v.'E n _,;;:;;.:.,.;.:.,._._._._._._ . ...A   ._ .   . A , fj?.’€·T=z >* A ‘ K
`   ‘·-   ‘ ihién     ;.;   ._4_._ ,    `;';A::;’`‘:’;°`;;;::;‘;":"’‘‘’`i:’:’      rg QQ   / W V
 ;»,;;¥§~. 7+,;g& ;      €‘»=¥   -·-=·»·-·—···· · —=·—··   ” ‘`   *;»` igiiiggiéiizieéééeiéf  A ‘ ‘§&%g§;;;;— Nigga.;  ·‘·;¢ F§§§QQQgQg`  A ·  _ Q A f
A -* ""    ~   : ~w ‘=· -             ;%2%2€;é;%2E;:;2;é; 122%*  ‘ Z B‘·‘   ‘'‘·-=’ `  .·   T   . » ~
    ‘   J! Q. ‘  ErE¢E=E¢E¢§ ¢E=E=:¢;‘  l   I `llvll U `:E';._..·.» ; ;-;-;~;v;¢; - .·.-  '  Q T {
    ’   ig; ’:’   *`4“`'`’'4  {   `;“’`’ CZTQZY" %§%§Z§ ;iE·;*;ijZ?%” B  \. K    
Y   ··~—,B   `     `   MLK E        > ·*??%¤   E AT W ‘
~   "   i V €?€?€?$??€$?€?€?€$€€?i€iE?€i~ T 4 ;E§;E;5;: A;E ‘ ‘ A
,   6) O E;] ""  ·     . j" ·
‘ ~ ¤· " =%¤5252$2is52%2i2%2%s%;5;Sz%;%;S;2;.__.;¤gi;2§2§2§s§si2fsf;€;izi;.  T
` m);  O     M .§E¤E·
V UNIVERSITY OF KENTUCKY AGRICULTURAL sxpznnmsm sTATn0N
DEPARTMENT OF AGRICULTURAL ECONOMICS
T- L¤xmc=.·r0r~1

 KENTUCKY DAIRY INDUSTRY FACTS
Guidelines at a Glance
PART I: THE DAIRY SITUATION ________________ 5
1. The Number of Dairymenls Becoming Fewer ........ 6
~ 2. Trend Shows Smaller Numbers but Better Cows, and _
Increased Production .................. 6 —
3. Growth Rates Change Supply-demand Relationships ...... 7
4. Consumer Preferences Change ............... 8
5. Government Price Support Objectives ............ 8 I
6. Price-support Operations Vary. Many People Benefit .... 10
7. The Adjustment Pattern and Future Growth ......... 10
PART II: KENTUCKY'S STAKEIN DAIRYING ___________ jj
1. Kentucky Is Important in the Nation' s Dairy Industry ..... 11
2. Industry Growth Patterns ................. 12
3. Importance of Dairy Income in Kentucky ........... 13
4. Farmers Use Less and Sell More of the Milk They Produce . . 14
5. Changing Marketing Opportunities .............. 15
PART III: MARKETING AND PROCESSING ____________ jg; ‘
1. Population and Marketing Potentials ............ 16 I
2. Major Production Area and Related Cow Numbers ...... 18
3. Whole—milk Buyers Are of Prime Importance ........ 18
4. Manufacturing Plants Are Near Production Areas ...... 21 .
5. Kentucky Plants Can Expand Operations ........... 21
6. Fluid Processors Go to Population Centers ......... 23
7. Bottled Milk Distribution Is No Longer Local ........ 25
8. Relationship of Graded to Manufacturing Outlets ....... 28
BLUEPRINT FOR PROGRESS ................... 28
PROBLEM AREAS ........................ 30
2

 A LIST OF TABLES
Table Page
A l. Changes in Per Capita Consumption — U. S., in Pounds
by Type of Product .................. 8
2. Milk Price-support Levels and Percentage of Parity, 1
Marketing Years, U. S. Average 1950-64 ........ 9
_ 3. USDA Dairy Price-support Purchases .......... 10
4. Farms with lVIilk Cows by Herd Size .......... 11
5. Trends in Production and Income by Periods ...... 12
6. Sources of Cash Income . .............. 14
7. Farm Disposal of Milk ................ 14
8. Sources of Cash Income from Milk ........... 15
9. Volume of Milk through Primary Outlets ........ 15
10. Number of Licenses Issued to Buying Places ...... 16
11. Importance of Outlets and Patronage, 1964 Estimates. . . 20
12. Kentucky Milk Cow Inventory, 1964 . .......... 21
13. Trends in Daily Shipments of lV[ilk to Specified
Markets, 1947-64 .................. 23
14. Increased Importance of Large Firms ......... 25
15. Changing Type of Ownership of Fluid Milk Plants
Serving Kentucky .................. 25
16. Characteristics of 247 Kentucky Grocery Stores
Selling Milk .................. 26
3

 LIST OF FIGURES Page ~
Fig. 1. — Trends in Numbers of Milk Cows in Kentucky and the
United States. The index shows each year as a percentage
of average numbers kept for the 1935-39 period. 6
Fig. 2. - Milk Production Shows an Upward Trend Since 1925. The A A
index gives each year’s production as a percentage of the
1935-39 average. Declining cow numbers have been more h
than offset by increased production per cow. 7
Fig. 3. - Production Levels Set by Individual Dairymen. Cow testing _
associations and leading states are practical targets for
Kentucky. New records have been set in each year for more
than a decade. 13
Fig. 4. — Population Distribution, Kentucky Adjacent Areas, 1960.
Both the number of places and their size are measures of the
market potentials of an area. 17
Fig. 5. — Number of Milk Cows Per 1, 000 Acres of Land. Milk
production is relatively heavy in northern Kentucky and in a
belt of counties extending southwest into middle Tennessee. . ‘
Concentrations are also shown in the valleys of eastern
Tennessee, Virginia, southwest Kentucky, and around
St. Louis. 19 `
Fig. 6. - County Location of Manufacturing Outlets, 1964. The
coverage in adjacent areas is less complete, but enough to .
emphasize the important links between production areas and
the location of manufacturing plant facilities. 22 ‘
Fig. 7. — Sources of Milk for Bottling Plant Operations, 1964. The
county location and approximate numbers of inspected farms
that supply graded milk to handlers is given. 24
Fig. S. — Fluid Milk Processing Plants Selling Milk in Kentucky. Major
cities and strategic locations in population centers outside
dominate the distribution patterns. Widespread coverage is _ _
achieved through company owned routes and independent
distributorships. 27 ·
4

 1 KENTUCKY DAIRY INDUSTRY FACTS1
By John B. Roberts
Department of Agricultural Economics
This report provides a quick reference to trends and selected production and
market information on Kentucky's dairy industry. The brief commentaries and data
are intended to help the reader understand the nature and importance of this great
enterprise. Kentucky is essentially a state in which topography and rainfall call for
" extensive use of cover and forage crops to prevent soil depletion. The dairy enter-
prise is especially suited to Kentucky conditions and has made phenomenal growth
during the last 30 years. From a business and farm investment point of view, the
production, processing and distribution of milk and dairy products are major consider-
ations in the economy of the state.
Business generated by the dairy enterprise is a primary consideration in many
communities, and for the state as a whole it is a billion—dollar enterprise. In 1964
the number of milk cows and replacement dairy stock exceeded 800, 000 head with a U
valuation of more than $130 million. The farm investment in buildings and equipment
used in milk production was about $200 million, and the investment in land to support
dairying had a value of more than $500 million. The total investment in plants and
equipment used in processing and distribution probably exceeds $100 million. About
7, 000 businesses are licensed to sell dairy products in the state, and Kentucky
consumers spend about $200 million annually for the dairy products consumed.2
In spite of its growth and importance to the state, the farm production of milk
is predominantly a small- scale operation in which farmers produce milk that is very
much the same, county by county, and area by area. But there is less similarity
beyond the farm gate. The buyers are concerned with processing fluid products and
making cheese, evaporated milk, butter, powdered milk, ice milk, and ice cream.
They are concerned with products in bottles, packages and branded containers. There
is competition among the manufacturers, and different manufacturers may have vary-
ing product standards and requirements. But in the final analysis, the marketing
agencies, the methods of collection, and the processing techniques are those suited to
handling milk as it is now produced. The challenge to the industry is to grow and
build on existing foundations. A vigorous, efficient industry that can compete success-
fully for markets within the state and for those outside is essential in maintaining and
expanding the Kentucky dairy enterprise.
1Much of the statistical material found in this report was taken from the latest
available official publications of the U.S. Department of Agriculture and other govern-
mental agencies. Special acknowledgment is due the Kentucky Crop and Livestock
Reporting Service, 434 Federal Building, Louisville. This agency, sponsored jointly
by the U. S. D. A. and the Kentucky Department of Agriculture, provides current and
annual estimates by which part of the data in this report can be kept current.
2Estimates by the author are based on the available data and opinions of knowl-
edgeable people in the industry. No official industry-wide data are published.
5

 RART1
THE DAIRY SITUATION
Background developments and related facts on the dairy situation are important
as bench marks in planning the future. Changes in the nation as well as prospects
for Kentucky must be taken into account. (
1. The Number of Dairymen Is Becoming Fewer
In the United States the number of farms keeping milk cows has declined by more f
than 50 percent since 1950. The rate at which farmers leave dairying differs within
regions, but generally milk production has given way fastest where it was a side-line
enterprise. Shifts away from dairying have been notable in the North Central Region _
V where there were more profitable farm enterprises. In other regions alternative
enterprises, combined with off-farm employment opportunities strongly influence the
emphasis given to dairying.
2. Trend Shows Smaller Numbers, Better Cows and Increased Production
The number of milk cows kept on farms has declined since 1945 in the United
States and since 1950 in Kentucky (Fig. 1).
M n L K cows      
  giff   i°'°g° IIIIIII tiii      
“ n|||||| WT
120   QL; §2:?;2
• • ,9;; 22; éiiiéi
II!   ·   I I: zi xi
"° ‘ it     ·
 IIEI  AIIEII      
\ mm cas casu-
IIMNIIII   I ii ii  
90 —· · “*      
v - ` -      
· az: z:;  
70 azz:   mz
it     l     
I925 I93O I935 l94O I945 I95O I955 I96O l965
Fic. 1 — TRENDS IN NUMBERS OF MILK cows IN KENTUCKY AND THE U.S.
Index shows each year as a percentage of average numbers kept for 1935-39 period. °
Total milk production, however, has increased steadily. Between 1925 and
1945 that of Kentucky and the United States increased at about the same rate. Since
1945 milk production in Kentucky has grown at a faster rate than that of the nation
(Fig. 2).
6

 MILK Pnonucraou - ,
; ; 5 g =~ =< 4.
O O I ···' oto Level
 
*DAIRY HERD IMPROVEMENT ASSOCIATIONS
A FIG. 3 — PRODUCTION LEVELS SET BY INDIVIDUAL DAIRYMEN.
V Cow testing associations and leading states are practical targets for Kentucky.
New records have been set in each year for more than a decade.
3. Importance of Dairy Income in Kentucky
Sales of milk, cream, cull dairy stock, and veal calves, plus the value of milk
used on farms, have exceeded $100 million in Kentucky every year since 1950.4 In
1963, the farm income from dairying exceeded $130 million. Milk sales amounted to
$93. 3 million; that used on farms had a value of $10. 9 million; and sales of veal
and dairy stock amounted to over $26 million.
Sales of milk and cream are the third most important source of cash income.
I Table 6 shows that the leading sources of cash income in 1963 were tobacco—39. 2
percent, cattle and calves including dairy stock——19. 8 percent, and dairy products-
14. 2 percent. Other sources of importance included other crops, hogs, poultry, and
sheep and wool.
4Estimates based on culling rates, dairy veal production, and sales of surplus
breeding stock indicate that dairy farmers received from $25 to $35 million annually
from animal sales. Changes in beef prices were largely responsible for income
variations.
13
I

 Table 6. —Sources of Cash Income
 
Dollars
Source (000) Percent
Tobacco 258, 867 39. 2 .
Cattle and calves (including dairy stock)? 128, 496 19. 8 ( -
Dairy products 93, 304 14. 2
Crops (other than tobacco) 62, 859 9. 7
 ‘ Hogs 59, 599 9. 2
Poultry 32,168 5.0 _
Sheep and wool 4, 632 0. 7
Miscellaneous (specialties) 7, 687 2. 1
All crops 328, 941 50. 4 _
All livestock 318, 671 49. 2
 
y No data are available to show how much of this income was from cull dairy
stock and veal calves from dairy herds.
4. Farmers Use Less and Sell More of the lVIilk They Produce
In 1940, 50 percent of the milk produced on Kentucky farms was fed to livestock . `
or used by the farm family. In 1964 home use was less than 11 percent and sales
were 89 percent, as shown in Table 7.
Table 7. —Farm Disposal of Milk
 
1940 1950 1964
 
(percent)
Milk consumed or fed on farms 50 37 11
Milk sold from farms _Q 73 jg
Total Milk 100 100 100
 
Since 1940 the sale of farm—made butter has been almost completely discontinued, I
and the amount of milk marketed as farm-separated cream to butter manufacturers
has declined from 43 to less than 1 percent. Milk delivered as whole milk for bottling
and for manufacturing provided about 95 percent of the cash income from milk in 1964
(Table 8).
Whole milk sales have become dominant and a major factor in expanding market
outlets and sustained dairy incomes.
The opening of new processing facilities and increased marketing opportunities
are closely reflected in the changing volume of milk uses as can be seen from data in
Table 9.
14

 Table 8. —Sources of Cash Income From Milk
_  
f 1940 1950 1964
, Source (percentage of cash)
Milk sold as farm butter 4 1 *
Milk sold as cream for butter making 43 27 2
. Milk sold as whole milk (fluid form) 37 83 95
Milk sold by farmers retailed 16 10 3
 
*Nominal l
Table 9. -Volume of Milk Through Primary Outlets
 
Year Farm Used in Processed by Used on the
Specified Production Manufacturing Bottling Plants Farm
(million pounds) )
I 1940 1, 841 577 388 876
1950 2,428 1,099 516 813
1960 2,495 1, 146 994 355
1963 2,664 1,355 997 312
 
U Both manufacturing plants and fluid milk processors have more than doubled
their volume of receipts since 1940. Farm use has decreased sharply.
' One can gain an idea of the current demands for milk from the way Kentucky
milk is now being used. Data for 1964 show it was divided among these five general
categories:
Bottling Plants 39%
Cheese (all types) 25%
Evaporated and Condensed 18%
Butter Manufacturers 14%
Ice Cream and Other Use 4%
100%
In terms of income, producers selling graded milk to fluid milk plants received
well over half the total cash receipt from milk sales.
5. Changng Marketing Opportunities
In 1925 there were no cheese plants and no evaporated milk processors in the
state, and the number of milk and ice cream plants licensed was small. A rapid
expansion in the number and kinds of marketing organizations occurred during the
1930's. By 1940 the number of licensed milk and cream buying places had reached
a record level of 1, 430.
15
I

 Table 10. —Number of Licenses Issued to Buying Places
  -
Cheese Evaporated Milk Milk and Ice Cream `·
Year Creameries Plants Qperations Cream Plants Stations Total ,
1925 3 0 0 9 570 592
1930 12 4 6 24 1,113 1,159
1940 10 14 7 66 1,113 1,430
1950 6 15 10 104 805 940 ‘
1960 6 18 13 73 269 379 ‘
1964 1 24 12 58 53 148 _
 
Table 10 shows that since 1940 the number of creameries licensed has declined
from 10 to 1 and cream—buying stations have declined from 1, 100 to only 53 in 1964.
During the same period cheese plants increased, the number of concentration points
and the geographic coverage by evaporated milk outlets expanded, and the trend toward .
fewer and larger milk and ice cream plants occurred.
PART III
MARKETING AND PROCESSING _
In marketing, Kentucky dairy farmers have a choice of outlets among firms that J
process and distribute a wide variety of dairy products. Competition among local, A
area and national distributors varies, but the primary concern of the management of
each is to build a sound and growing business. Because of specialization in operations, i
geographic dispersion, and scale and scope of operations, marketing programs of
multi-plant firms differ from those of single independent operations.
Strategic plant location is important to managers in their current operations and
in building for the future. Interstate road systems, location of consumers, mass
\\ distribution techniques, and price—cost structures play a part in this. In the process
of plant growth, new techniques will possibly focus more attention on total plant and
management efficiency including procurement and distribution. A bench mark from
which to appraise such developments is of concern to producers and businessmen alike.
1 . Population and Market Potentials
Milk and dairy products are highly mobile and find their way into the cities and I
into hundreds of smaller places that make up the crisscross of marketing operations.
Both the concentration of population and its relationship to limited access and rapid
transit highways in Kentucky and in surrounding areas are of concern at this point.
These, in rough approximations, are given in Figure 4.
The relationship between the consuming markets, processing plants and farm
production areas is an important consideration in setting out the dairy potentials of
the state. From a competitive standpoint, Kentucky's dairy industry is not confined
to state lines. Surrounding states provide markets for Kentucky milk. Producers in
16

   -
-•xn'·\]
• ° '•' ° vo ° 5..: ’i•°:
I - _ }•_ ..·';- ·; ·_{ B. ` ;•·*‘a§`:.$§|• 3 ` : |•a u•l   I·.&··2T‘·:
.,.» - ..».·•., · :¤.!'%»? .»‘E ·· *?·°’<.·.·°'*.Z.f .’ °·"=°:.·`¢»2'    . ’   ‘ V ·‘?>=i"F  
‘ .1H. ' • ,4 g-. Q, 4    `;?,`§$¥_::••:w),  ._ ·:;•,· Q5: _.;.•: ;_ Mi';. _ {`_€ I
  ··€.·. ’%»*'·m": YA.?  E:}$1%i{;*°"?`•`°".s:·2%%T*.`Y?    Fg
... •. .· .•].·E.:` · V : °.·?)~/;?·_.% ‘  \· f··!,T§\}$ fb.? .   .,:“ •  tv: •$: 4 {$g·•f/lj_?. 7:E  
• · •.•| ·_·’_’,-;• W. ~·I I-- U`.; = 5 9D l·•‘¢ 4,7%} l •· ?| M55:. ||Q|°    gr `· 'I`_l ’ •  :··§ Ig
_, • I, . • . _ ••· •   • · • kg? : |’ *.3. :j’“,;•• ·‘,·°.$·’  ·,\2— g_)‘ _  •’·’••,     , 3}
S" · ET.-  .  "`Z · °”1:'°‘:{2;’é*"`~»  :3:3%*   :°j·'.‘?HT€'ZK·  ·..       bb 53
• , uz; _ ,• _' g- . • » I • .\!° _ •'_• 's•_ * :_•• ‘°·_,·‘_'.. • ,•,,.•. _ •,•: ·  ,. gg
i !":•$•:t'••·?4·J(;`• •··&.*z§ •· "" I-   •` O  |·?;·•  I:•·  I r ==? i—.•.I g-.   ••;•·&\\`|:%3 ’ *;.0 $9
.,•• zu'. _° .r__• .•°• •:;_J .# 1• •°,• ., ig 4"}—·§•.,    · '·.·%I.` .:2.% °,g2_‘__;•,";_ • ° J ,__ ' $-¢ E
. ~’€"rq·· - ' " .· ••.'  $7--:V · ’ ·  »%  fi ?°·‘°:¥;‘“*` Z’*i}·Z· {Y-"  ·  FE". ·Z·5’··°·   <> (D 2
I °, l},. A ' · _E!O,• ,° _:. · •.  {I   °. .· .°j/,;’;°;,°qf• ·•,• °.=,.' ·'.°L ~·`•|:%.{ ::,j;_'·• . •,· ‘ L. w E 5
. \ . · · ' °'•:   V  . - •. bag.; ’·¥’·7s}•::}° =° ' Q; I ‘ •°. ‘..•°:`: :A""•.•°•°'. .»~·"¥ cj (D O
' @•| •· '   ’• , x  ~».$z ..?.%’_ _f— %::;z°7§·R;§_·;· _ ft' . ;Q_<•;•Z‘#•»·bi§,·»:. P 5; "‘ ¤,> O
 ;• {lic,. !• . 7:  •~• . •. iq » wif?.} ,•,¢ .C._4,_,;&2:g`\~ ,·¢•: ._. :.•_ ·~w}T$Z. :;rR,»:•, 1 . E $54
»*?.?"?·  , • ·’ ' • °' • ,‘ • °: I " • '\ ,/• •. / • Qu'.  • ° vt:. ·• · = ·•·••
  YA ‘ ‘·"•$•’- f* `·~ °'• ••°• ••• i' ° .\'\.3—:•f.• *\'•°'|•}:' '. • {Z3'. °. .T""(9’°.\"¥•£s":, T: ·1•I 2 gg
  ·.· ".‘?°'I. .7.* e' %*¢}(.’*"—l1 '¤· - ·%• ° ‘·' fin'?. ...·\`$• E  . •'.`* ":,·‘ .°:*·::'.Z:°·° F-rl · ‘”‘
_   • °° ' .1•:' ' 2 ‘ _ · ‘• · .fS":.•: E: %   ,7 _ _.,,V,}‘RZQi \ .5-. £V;:·’P · ,•;_:°=Z°_fl44 M GS E
  · • _ P ,_ ' • . • •`• • . _.:·1.•{»   ··• ,<.N_'q,•.,€/i..•:· ·)'.%;?.t:§ •._•_.: `\:_••;_:_  1 :, < E4) cd
 ·  , •,·•, _•· . ,•• I, {   if/:T?:_F•y   , •?.,z;,$-ZL.- ·   :_};