Extension to Dairies in Other States
In an effort to help Texas dairies assess their investment require-
ments for meeting EPA Region VI standards, Lacewell and Schwart
developed a model designed to estimate the costs of meeting the
EPA standards under alternative animal concentration, soil and
rainfall conditions. This model was used to estimate the costs of
meeting the more stringent EPA standards for AFPC representative
dairy farms in other regions (Table 4). These cost estimates should
be treated as rough approximations since labor and machinery costs
in other states may be outside the range used to develop the Texas
model. The investment requirements ranged from slightly more than
$21,000 for the 50-cow Wisconsin dairy ($10,581 + $10,518 for WIMD)
to nearly $42,000 for the 186- cow Vermont dairy.
Of substantial significance is the requirement that approximately
every five years, solids had to be cleaned out of the lagoon at a lump
sum cost ranging from nearly $600 for the moderate-size Missouri
dairy (MOMD) to more than $17,000 for the large Vermont dairy.
This periodic cost could become a significant factor in farm pros-
perity and survival.
Table 5 presents the net cash income simulation results for the
dairies on which investment and cost requirements were made as in-
dicated in Table 4. These results generally indicate that dairies hav-
ing no problems cash flowing before retrofitting to meet the EPA
standards will be able to pay off the resulting costs without encoun-
tering financial problems. However, dairies that are already having
problems cash flowing, such as the Vermont dairies, will experience
even greater problems. For dairies experiencing cash flow prob-
lems, the EPA regulations could be the decisive factor resulting in
an exit decision.
Implications
EPA regulations are often criticized by farmers and their organi-
zations as being unrealistic and as creating havoc on the farm. This
analysis suggests that this criticism may not be true for the vast ma-
jority of dairies that are currently relatively profitable. However, if a
dairy is already experiencing cash flow problems, compliance with
EPA regulations could push this farm over the brink into financial
failure. Such farmers would probably find it desirable to minimize
their losses and exit the dairy industry.
Dairy farmers that are bringing their farms into compliance with
the new EPA standards could find it desirable to expand their dairy
operations simultaneously. Such expansion may involve conversion
to different farm structures such as free stall confinement housing on
a concrete slab. The related investments are substantially larger
than those estimated in this study for simply meeting the EPA stand-
ards on an existing operation. Such large investments may lead to
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