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New Mexico Dairy Industry on Torrid Growth Spurt, NMSU Report Says

LAS CRUCES - One of New Mexico's biggest cash cows is its dairy industry, reports a New Mexico State University agricultural economist. New Mexico ranks seventh nationally in dairy product sales, with dairies adding more than $730 million to the state's economy.



Ereney Hadjigeorgalis, an agricultural economist at New Mexico State University, recently completed a new technical report on the state's surging dairy industry. New Mexico is the nation's fastest-growing milk-producing state. Dairies contribute more than $730 million to the New Mexico economy. (11/08/2005) (NMSU Agricultural Communications Photo by J. Victor Espinoza)

"Dollar for dollar, dairy is one of our big players," said Ereney Hadjigeorgalis, an assistant professor in NMSU's agricultural economics department. "It is the top agricultural contributor to the New Mexican economy, accounting for 37 percent of total agricultural cash receipts."

That rise to the top has accelerated remarkably since the turn of the century. From 2000 to 2004, New Mexico milk production has rocketed 28 percent, thanks to increases in both cow numbers and production per cow, she said.

"We're the nation's fastest-growing milk-producing state," Hadjigeorgalis said. Her findings are published in a newly released NMSU technical report titled, "The U.S. Dairy Industry and International Trade in Dairy Products."

Two primary factors are driving this growth: excellent environmental conditions, especially on New Mexico's eastern side near Clovis and Portales, and a restrictive regulatory atmosphere in California that is pushing new operations to the Land of Enchantment.

"Dairy cows like New Mexico," said Jim Libbin, an agricultural economist with NMSU's Agricultural Experiment Station. "They produce very well under our growing conditions."

A bigger factor, though, has been a lack of elbow room in California. "Virtually all our expansion has been California dairies selling out because they weren't able to expand as they wanted," he said. "Also, California's regulatory regulations have put the squeeze on dairies there."

While milk is produced in all 50 states, the bulk of U.S. production is heavily concentrated in just a few states. Last year, 10 states accounted for 71 percent of the milk produced. In order of output they were California, Wisconsin, New York, Pennsylvania, Idaho, Minnesota, New Mexico, Michigan, Texas and Washington.

Asked who is making all this milk, Hadjigeorgalis said more than two-thirds of dairy farms are family owned or family corporations. But recently, there's been a jump in large-scale operations, especially in New Mexico. Farms with 500 or more cows produced nearly half of the milk though they represented 22 percent of all operations.

Today, New Mexico has about 180 dairies and some 326,000 head of dairy cattle. The average herd size is 1,811 milk cows. Large-scale dairies clearly dominate the state, she said. Ninety-eight percent of the inventory in 2004 was in operations with at least 500 head of dairy cows.

These bovines make a lot of milk. Last year, a single milk cow in New Mexico produced an average of 20,583 pounds, or about 2,573 gallons of milk. About half of all milk produced is processed locally into cheese.

"For instance, Leprino's plant near Roswell is one of the largest mozzarella cheese manufacturers in the world," Hadjigeorgalis said. "That facility alone uses approximately 4.5 million pounds of fluid milk a day."

Last month, Southwest Cheese Company opened a $190 million "superplant" near Clovis. The 340,000 square-foot plant is expected to produce 250 million pounds of cheddar and cheddar-style cheeses and 16.5 million pounds of whey products a year at full capacity.

According to the NMSU report, demand for New Mexico and U.S. milk products in general is on the rise. In 2004, U.S. dairy products were exported to nine major markets, including Mexico, China, Canada, Japan, Philippines, Republic of Korea, Taiwan, Thailand, and Indonesia. NAFTA allies Canada and Mexico jointly consume approximately 93 percent of all U.S. dairy exports of fluid milk and cream.

"Meanwhile, China has increasingly become an important export market, absorbing almost a tenth of the nation's exports last year," Hadjigeorgalis said. "We're sending almost three times the quantity exported in 1999."

Chinese imports of whole-milk powder from all sources are expected to increase by 25 percent this year to 113,000 tons, she said. Demand is coming from higher income groups and consumers who lost confidence in the safety of domestic milk supplies after 12 cases of infant death were reported due to contaminated milk powder.

Ice cream is another U.S. dairy export. Last year, more than 23,000 metric tons of U.S. ice cream was exported. The leading market was Canada, which tallied 80 percent of all ice cream imports.

The U.S. is a net importer of cheese, yogurt and butter, she said.