IMPACTS OF EPA DAIRY WASTE REGULATIONS ON FARM PROFITABILITY

determining a before∕after context in the costs of meeting the EPA
regulations. The findings are presented in Table 2. Part of the farm-
to-farm variation in costs is reflected in the extent to which the farms
had already dealt with the waste management issue. The $528,000
investment required of the large Florida dairy (FLLD) was the result
of the unique conditions and requirements to curb the contamination
of fragile waters related to the Everglades.

Using the FLIPSIM policy simulation model developed by James
Richardson at Texas A&M, the authors simulated the impacts of the
new, more stringent EPA policies on the profitability of Texas and
Florida representative farms (Table 3). In this table, Base represents
the baseline net costs income prior to retrofitting for the EPA pol-
icies while Enviro indicates the results after
retrofitting. These results indicate that dairy farms having cash flow
problems are simply put out of business sooner as a result of the new
EPA requirements. On the other hand, the larger profitable East
Texas dairy (TXEL) and the Central Texas dairy (TXCL) were suffi-
ciently profitable to pay off the amortized debt resulting from the
new investments.

While the moderate-size Florida dairy (FLMD) reflects the same
pattern of results as the Texas dairies of comparable size, the large
Florida dairy (FLLD) represents a case in which the EPA invest-
ment requirements were so large that its ability to cash flow is
placed in jeopardy. This was the only case in which a large and
otherwise profitable dairy is projected to encounter cash flow prob-
lems due solely to the EPA regulations. This result, in part, is a con-
sequence of the large investments required ($528,000) to build the
unique waste containment structures.

^aDirt and concrete work includes the cost of constructing or renovating a drainage pit, retention
lagoon and storage lagoon.

^bMachinery and equipment includes the cost of any additional pumps and irrigation equipment re-
quired and was not previously in the equipment complement of the dairy.

^eAnnual maintenance costs include lot cleanup, pumping, and additional repair and maintenance
costs.

^dFor these dairies, the annual maintenance was included in the cost of hired labor and could not
be easily separated, except for the moderate-size East Texas dairy which contracted annual
lagoon cleaning and maintenance.

^eThe moderate East Texas (TXEM) dairy was only required to update existing equipment and fa-
cilities.

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