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Despite industry hardship, dairy added $20 billion to California economy last year


The California dairy industry contributed $20 billion to the state economy and supported 179,900 jobs last year, according to a report from the University of California Agricultural Issues Center.

Dairy is still the top agricultural commodity in California, despite a rough couple of years for the industry.

“It’s impressive to us, that even given some of the milk price issues that California farmers have been facing the past few years,” William Matthews, a researcher at the center, said. The industry “is still contributing quite substantially to the economy.”

In calculating economic impact, researchers included all the spending and employment generated directly and indirectly by the California dairy industry. The report was prepared for the California Milk Advisory Board.

Dairy’s economic contribution has declined since 2015, the last time the Agricultural Issues Center did a similar report. Then, it found dairy’s contribution to be $21 billion.

“We were kind of expecting to see a pretty steep drop-off,” Matthews said.

Matthews co-wrote the report with Daniel A. Sumner, director of the Agricultural Issues Center. Matthews said they were surprised, given that milk prices have been low, expenses have been rising, and there are fewer dairy farms now than there have been in decades, that the industry was still so robust.

“Even though being a dairy farmer in California has been a lot more of a challenge,” farmers are still managing, Matthews said.

While the total number of farms has gone down, the average size of the farms has grown.

In 2017, California dairy farms had on average five times more cows than the national average.

Even Sacramento County, which has smaller farms compared to the state as a whole, averages almost 500 cows per farm, according to the California Department of Food and Agriculture, which is more than twice the national average.

In 2017, dairy was the second-largest agricultural commodity in Sacramento County, generating $52 million in revenue.

The county also has the HP Hood LLC dairy processing facility, which processes milk and other nutritional beverages in everything from half-gallon to single-serving sizes. That facility also processes fresh milk into shelf-stable packages, that can stay good for up to a year until being opened.

Processing facilities are one of the reasons dairy has a unique ripple effect on the economy, Matthews said. On the production end, cows support not only dairy farmers, but farmers growing cow feed, as well as veterinary services. Then once milk is produced, it can’t travel very far to be processed or sold.

“Dairy is unique in that it has a short shelf life,” Matthews said. That means processing facilities — and their economic impact — stay in the state.

And dairy processing, turning milk into butter, powder, yogurt, ice cream, cheese and other products, makes up the bulk of the value of dairy, in terms of economic contribution, sales, and jobs.

“It’s more labor-intensive than packing houses and fruit,” Matthews said. “I don’t think it takes nearly as many people to process almonds as it does to process dairy.”

Source: BizJournal


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