Alan Furchtenicht (FURCHT@macc.wisc.edu)
Mon, 11 Oct 93 15:37 CDT
Cornell Chronicle (07/08/93): Use of BST will reduce dairy profits
By William Holder
Bovine growth hormone may help cows increase their milk, but it will decrease
the long-run profits of dairy farmers if it is approved, according to a Cornell
"Consumers will benefit because use of bovine growth hormone will increase the
supply of milk and drive down prices," said Loren Tauer, professor of
agricultural economics in the College of Agriculture and Life Sciences. "But
farmers as a group will lose for the same reason. This phenomenon is not unique
to bovine growth hormone and, in fact, occurs with most technological changes in
the dairy sector.
"Only those farmers who are positioned to benefit from continuous technological
change stand to gain from increased milk production," he said, adding that few
small dairy farms are in such a position.
Tauer dismisses the argument that the hormone, which is expected to receive
approval from the U.S. Food and Drug Administration, can be used just as
advantageously by as many small dairy farmers as by large ones. Research has
shown that bovine growth hormone (BST) does not have as much effect on
low-yielding cows as on higher-yielding cows found on better managed farms.
While some small farmers have high-producing herds, a 1989 survey by the
Wisconsin Agricultural Statistics Service showed that, on average, large herds
of 150 or more cows are substantially more efficient than herds of 40 or fewer
The likely result of BST approval is that fewer cows will produce the nation's
milk supply, and some small farms may be eliminated before milk demand and
supply are balanced, he said. Tauer, who teaches a course in production
economics, advanced his views in a chapter in a recent book, Bovine Somatotropin
and Emerging Issues: An Assessment (Westview Press, 1992). Bovine somatotropin
is the scientific name for the growth hormone, which is produced through
recombinant DNA technology.
Adoption of BST, Tauer contended, also will accelerate a trend already in place:
the consolidation of dairy farming into fewer regions. The milk industry is
headed the way of the broiler industry, in which the raising of chickens, once
widely dispersed, is now carried out primarily in just a few areas.
"There will always be some regional dispersal for fluid milk because it's
expensive to transport," he said. But much of the nation's milk is used for
processed products that can be transported easily. Dairy farmers in isolated
areas increasingly will find that they cannot obtain input supplies at prices
they need to remain competitive, he predicted, adding: "The farming
infrastructure won't be there for them."
Three surveys carried out during the 1980s showed that large dairy farmers are
more likely to adopt BST more quickly than small farmers, many of whom said they
would wait several years or might never use the technology. The larger farmers,
Tauer pointed out, are the ones who try to stay ahead of the pack by always
adopting the latest technology. These are the dairy farmers who will be able to
increase profits by using BST.