The Impact of the Dairy Industry in the Southern Ogallala Region

1. The Impact of the Dairy Industry in the Southern Ogallala Region 2013 Ogallala Aquifer Program Workshop Amarillo, Texas Bridget Guerrero, Steve Amosson, and Ellen Jordan

2. Problem • Population, economic, and environmental pressures forcing dairy owners to relocate • Significant growth in dairy cow numbers in the Southern Ogallala Region • Irrigated land for silage production • Less expensive land prices than other dairy producing areas

3. Ogallala Aquifer • Main source of water for the Southern High Plains of Texas • Irrigated crop production accounts for more than 90% of water use in the region • Withdrawals exceed slow recharge rate of the aquifer

4. Objectives • Evaluate the impact that dairies are having on the Ogallala Aquifer • Estimate the impact of the dairy industry on the regional economy • Determine if the growing dairy industry is an effective use of scarce water resources.

5. Study Region

6. Cropland Acres

7. Dairy Cow Inventory

8. Dairy Cow Inventory

9. Data and Methods • Direct water(drinking and facility maintenance) • Inventory data (National Agricultural Statistics Service, 2011) • Daily water requirement of 55 gallons per day (Freese and Nichols Inc., 2010).

10. Data and Methods • Indirect water (required forage and grain fed) • Estimated based on a total feed requirement of nearly 24 tons on an annual basis for every dairy cow (Jordan, 2011)

11. IMPLAN Model • Helps us to understand the linkages between elements of an economy • Types of Effects:

12. IMPLAN Model • Measures of economic activity • Industry Output • Value Added • Employment

13. Direct water use

14. Feed grain production and demand from confined livestock operations

15. Feed requirements for dairy operations • a Composite is calculated assuming 0.77 homegrown replacements per cow and shrink from harvest to consumption of forage • b Assumes dry matter content of 90%, 35%, 86%, 90%, 89%, and 98% for alfalfa, silage, concentrate, cottonseed, protein, and minerals, respectively • c Based on an estimated dairy cow inventory of 453,200 head in 2010

16. Indirect water use and corresponding irrigated crop acreage required

17. Direct and indirect water use by dairy cows

18. Direct and indirect water use by livestock and irrigated crop production in comparison to dairy water use

19. Value of milk production and processing

20. Economic contribution of the dairy industry

21. Percentage of total economic contribution of the dairy industry by state

22. Summary • The increasing presence of the dairy industry in the area has generated substantial economic benefits • $4.3 billion in annual industry output and 13,400 jobs • Dairies require almost 1.6 million acre-feet of water • 27,921 acre-feet of direct water • 1,570,333 acre-feet of indirect water

23. Summary • Economic impact of dairies relative to water use • $93,437 per acre-foot of direct water • $1,632 per acre-foot of total water

24. Implications • Further expansion of dairies will affect crop composition • Additional grain requirements will come from imports as the region is grain deficit with an average of 35% of feed grain requirements imported • The addition of dairies may help offset other losses in agricultural economic activity due to the decline of the aquifer

25. Thank youBridget Guerrero, Ph.D.Program Specialist - Agricultural EconomicsTexas A&M AgriLifeExtension Service1102 East FM 1294Lubbock, Texas 79403ph. 806-746-4020blguerrero@ag.tamu.edu