Importance of the New Mexico Dairy Industry

CR 613
Victor E. Cabrera and Robert G. Hagevoort
College of Agricultural, Consumer and Environmental Sciences, New Mexico State University

Authors: Extension dairy specialists, Agricultural Science Center at Clovis, New Mexico State University. (Print Friendly PDF)

The New Mexico Dairy Industry in the United States

New Mexico's dairy industry is a top contributor to national milk production. The seventh largest milk producing state, New Mexico provides 7.1 billion pounds (4%) of the 177 billion pounds of milk produced annually in the United States, according to the National Agricultural Statistical Service (NASS). The 33% growth rate in New Mexico's milk production during the last five years places it fourth in the nation for growth, after Kansas, Idaho, and Oregon. During this last five years, national milk production increased only 5.6%, because many states had decreasing trends (Table 1).

Table 1. Top five states in percentage of change in milk production from 2001 to 2006.

Of the four major milk production areas of the United States, only the West showed an overall increase in production (17.6%), while the Midwest, Northeast, and Southeast showed an overall decrease in milk production in the last five years (Figure 1). Most of the states with increasing production trends are in the West, while the Southeast has most of the states with decreasing production.

Figure 1. Growth rate of milk production in the United States, by region, 2001-2006. Source: data from the National Agricultural Statistical Service.

New Mexico also ranks seventh in the nation in total number of milk cows, with 340,000 cows, an increase of 30% in the last five years (2001-2006). The number of cows in the nation decreased 2% during this time period. In terms of milk productivity, New Mexico ranks eighth in the nation, with an average production of 21,192 lbs/cow/year. Among the 10 highest milk producer states in the nation, only California and Idaho rank above New Mexico in milk productivity per cow. New Mexico holds the first place in dairy farm size with an average of 2,000 adult cows per farm.

The Dairy Industry in New Mexico

Dairy is the most important agricultural industry in New Mexico. Dairying produces more cash receipts than any other agricultural industry in the state. About 40% of the $2.6 billion in agricultural cash receipts comes from the dairy industry (Figure 2).

Since 2001, cash receipts from dairy farming have exceeded those from the beef industry in New Mexico (Figure 3).

Figure 2. New Mexico agricultural cash receipts. Source: data from the National Agricultural Statistical Service.

Figure 3. New Mexico's agricultural cash receipts versus dairy and beef industries. Source: data from the National Agricultural Statistical Service.

Milk has been the number one cash commodity in New Mexico for the last four years, with receipts in excess of $1 billion in each of the last three years. Milk productivity, in pounds per cow per year, has jumped from 13,500 to 21,200 in the last 20 years, while it has been accompanied by an expansion in the number of milking cows from 65,000 to 340,000. During the same period, overall state milk production has experienced a dramatic 11-fold increase, reaching 6.9 billion pounds during 2005 and 7.1 billion pounds during 2005/2006. According to the Agricultural Marketing Service (AMS) there are 172 dairy producers in New Mexico (Table 2, Figure 4).

Table 2. Dairy farms, milking cows, and milk production in New Mexico, 2005/2006.

Figure 4. Distribution of milk production in New Mexico. Milk production proportional to white dots. Luna and Torrance counties measured together. Source: data from the National Agricultural Statistical Service.

There are two major zones of milk production in New Mexico (Figure 4). Both go from the central to the southern regions of the state. One is located in eastern New Mexico, while the other is located in central New Mexico. The eastern zone is the major production area, with more than 75% of the milk volume. Within the eastern zone, Chaves, Roosevelt, and Curry counties produce 65% of total milk. In the central area, Doña Ana in the southern part of the state produces 15% of the state milk.

An "average" dairy in New Mexico produces 42 million pounds of milk in a year, receives $6.4 million of gross income, and gives direct work to 17 people. Curry County tends to have the largest operations in the state, with on average over 2,750 cows per farm, while Valencia and Bernalillo have the smallest operations with on average 500 cows per farm.

Records from the NASS indicate there were 31,000 milking cows in New Mexico in 1975, during which time Doña Ana and Roosevelt were the most important milk producing counties, each with about 18% of the state's cows. In 2006, 340,000 head of milking cows are reported to be in New Mexico, with Chaves, Curry, Roosevelt, and Doña Ana counties holding more than 80% of the state's milking cows (Figure 5).

Figure 5. Number of milking cows in New Mexico and in the most important counties, 1975-2006.

Milk production in New Mexico has increased at a rate of approximately 2.5 million pounds per month over the past 14 years (Figure 6). Based on this trend, milk production in New Mexico is expected to total 7.4 billion pounds at the end of 2006.

Figure 6. Trend of monthly milk production in New Mexico, 1992-2006. Source: data from the Agricultural Marketing Service.

Seasonal variation in milk production can be as large as 20% between the highest month (May) and the lowest month (January). An increasing trend starts in January and continues through May, then begins a gradual decline until November. Thus, milk production is increasing in winter and spring, declining in summer, and leveling out in fall (Figure 7).

Figure 7. Seasonal milk production in New Mexico, 2003. Source: data from the Agricultural Marketing Service.

Direct Socioeconomic Importance of the Dairy Industry in New Mexico

The dairy industry in New Mexico generates tremendous labor demand and economic development. A normal ratio of labor to cows in the dairy industry is 1:100 or one person by every 100 cows. With 340,000 dairy cows in the state, around 3,400 direct jobs are generated by the dairy industry. According to the last estimates of the AMS, New Mexico milk has a statistical uniform price of $307.4 for every ton of milk sold, which indicates that the value of the milk produced in New Mexico in a year is around $1.1 billion. Table 3 presents this information disaggregated by counties.

Using the same indexes, an average dairy farm in New Mexico, having 2,000 cows and producing 42 million pounds of milk, has annual revenue of $6.4 million and gives direct job to 20 people.

Table 3. Direct socioeconomic importance of dairy industry by county in New Mexico, 2005/2006.

Per Capita New Mexico Milk Production and Exports

According to the Milk Market Administrator (MMA), New Mexico has currently the third largest per capita milk production of milk in the U.S.A.—4,097 lbs/person—after Idaho (7,414 lbs/person) and Wisconsin (4,250 lbs/person). The per capita milk production in the U.S.A. averages 624 lbs/person.

The milk production per capita in New Mexico has increased substantially in the last five years, from 3,041 lbs/person in 2001 to 4,097 lbs/person in 2006, and it largely overpasses the capacity of consumption of 565 lbs/person (Figure 8). It is then estimated that the per capita consumption represents 13.4% of the per capita production and consequently that 86.6% or 3,547 lbs/person of milk produced in the state are exported out of New Mexico. New Mexico will export a total of 7.2 billion of pounds of milk in 2006.

Figure 8. Per capita milk produced in New Mexico. Source: data from the Federal Milk Market Administrator.

Dairy Processing Plant Business in New Mexico

Most of the milk produced in New Mexico is processed locally through an extensive network of 15 milk-related industries across the state. New Mexico has four milk fluid plants, five cheese plants, four powder plants, one ice cream plant, and one ultra filtration plant. In addition, there are three plants in El Paso, Texas that handle almost exclusively milk produced in south Doña Ana County, New Mexico (Table 4).

Table 4. New Mexico dairy milk related industries.

Conclusions

The dairy industry in New Mexico is the number one agricultural activity in the state and has the greatest economic impact. Increasing trends in number of milking cows, milk productivity, and overall milk production indicate the dairy industry will continue to have a positive economic and social impact on the state of New Mexico in the future.

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Printed and electronically distributed May 2007, Las Cruces, NM.