As Marcellus Shale development has been expanding across Pennsylvania, dairy production has been falling, but it's unclear how the two trends are connected, according to a report from Pennsylvania State University.
With anecdotes from shale country suggesting that some farmers are leasing their land to pay off debts and buy new equipment, while others are using the royalty money to shrink their operations or leave farming completely, Penn State professor of agricultural economics Timothy Kelsey compared county-level changes in dairy cattle numbers and milk production to Marcellus activity between 2007 and 2010 to look for trends in the data.
"Changes in dairy cow numbers seem to be associated with the level of drilling activity," Kelsey said. For instance, the number of cows in counties with at least 150 Marcellus wells dropped 19% on average but only dropped 1.2% in counties without Marcellus activity. And dairy production fell around 18.5% on average in counties with at least 150 Marcellus wells but increased 1% in counties without any Marcellus activity.
Whether those drops come from farmers using royalty cash to flee a historically difficult industry isn't conclusive, though, as Kelsey noted in his report. Milk prices also dropped "substantially" during the study period, while demand for corn sent feed costs rising. But with dairy farming accounting for about one-third of Pennsylvania farm receipts, the growth of the industry is important to the agricultural sector in Pennsylvania.
By and large, farm country and shale country don't overlap in Pennsylvania. Only one county among the top 10 agricultural counties in the state is also among the top shale gas producers: Bradford County on the New York border. The other major shale drilling hotspots all rank in the middle of the pack on agricultural production.
The correlation between cow population and oil and gas activity wasn't always apparent in the data. Between 2007 and 2010, Bradford saw 515 wells drilled and a 18.8% drop in cow population, but Wyoming County saw 16 wells drilled and a 45.7% drop-off in cow population.
The link is also shaky when it comes to Montgomery County, which saw the third largest decline in cow population in the state -- 33.3%, but saw zero wells drilled over the four year period.
The overall trend also masked "wide variation" among individual counties. Of the 19 counties with more than 10 Marcellus wells, Indiana and Potter counties actually experienced increased dairy farming activity. But in Clearfield County, cow numbers fell more than 26% while operators drilled 70 Marcellus wells. Still "the comparative large average declines in cow numbers and milk production in the Marcellus counties require additional, focused attention and better understanding of the dynamics of what is occurring," Kelsey said.
The report does not consider any potential relationship between dairy farm reductions and changes in environmental quality, real or perceived, connected to shale development. It also does not attempt to quantify the ways that dairy farms around the state might be using shale dollars to reinvigorate farming activities.