The rise of beef‑on‑dairy has changed the way many farms think about their finances. What began as an extra source of income is now a major contributor to overall profitability, especially during a year of tight milk markets. In fact, some industry leaders argue that beef revenue now rivals, and in some cases exceeds, the profit generated from milk itself.
“You guys may be in the beef business more than you are in the dairy business,” says Gregg Doud, president and CEO of the National Milk Producers Federation, during this year’s Professional Dairy Producers conference.
This shift has happened quickly. Not long ago, beef revenue represented a relatively small portion of dairy income. But today, the need for more beef has dramatically increased the value of calves leaving the farm.
“At the end of 2022 on the farm, the average dairy was getting paid about a $1 to $1.50 a hundredweight in beef equivalent revenue,” says Mike North, President of the Producer Division at Ever.Ag “Today, that number is north of $5. We’ve tripled that part of the financials. It’s a massive opportunity.”
Filling the Cattle Gap
One of the biggest reasons beef-on-dairy has grown so quickly is simple: the beef industry needs more cattle. In recent years, the U.S. beef cow herd has shrunk due to weather, high input costs and lower heifer retention, tightening the supply of calves for feedlots.
That shortage has pushed feedlots to turn to beef-on-dairy calves to fill pens, which has driven calf prices higher and created a source of income that’s becoming hard to overlook.
“Beef has become a major contributor to our revenue stream,” says Will Babler, principal at Atten Babler Risk Management LLC. “And it’s not going away. These prices may not last forever, but they won’t go back to what they used to be.”
Rebuilding the national beef herd takes time, and until more heifers are retained, the number of feeder calves available will remain tight, keeping demand strong for crossbred cattle.
“The question I get asked most often is how long is this going to last,” Doud says. “The answer is a minimum of three to five years. If you take that [beef] heifer and you retain her, then her offspring become steak at the grocery store. How long does that take? The answer is a minimum of three years. So this does not change in terms of what these [prices] can do.”
A Protein Driven Future
Consumer demand is also a major factor behind the momentum. Even as retail prices climb, beef continues to hold a strong place in American diets, and restaurants and retailers have largely kept it on the menu. That steady demand keeps pressure on the supply chain to find cattle wherever they can be produced efficiently.
“Six years ago, if you would have told that a steak could rise from $30 all the way to $65 and restaurants would still be full on a Tuesday night, I would have told you you were crazy,” Doud says. “But we’ve done it. This is demand driven. The U.S. consumer loves that product.”
The trend isn’t limited to the U.S. market. Globally, demand for animal protein continues to grow, and Doud believes supply will struggle to keep pace.
“If you look over the next 10 years and beyond, the supply of animal protein in the world with beef, pork, poultry and dairy comes nowhere near meeting the demand,” he says. “The current demand for protein in the world is unbelievable.”
A Market on Fire
In today’s market, beef-on-dairy calves are pulling in prices that would have seemed unimaginable just a few years ago. Day-old calves can sell for more than $1,500, and in some regions, even higher. That kind of money has producers paying attention in the same way they do when milk prices hit rare highs. North compares the current beef-on-dairy market to $24 milk.
“What should one do with $24 milk?” he asked. “Walk quietly into the sunset and say, we’ll wait to see if it gets better?”
With prices sitting at all‑time highs, this isn’t the moment to step back.
“That’s where we’re at on beef right now,” he says. “We’re talking about all-time records, and you just don’t walk away from those and say, ‘Ah, I’ll check back in next month.’ That’s not how we approach markets like this. You’ve got to go after it.”
Part of what makes beef-on-dairy calves so valuable is the consistency and predictability they bring. Feedlots appreciate that these animals perform reliably and arrive in good condition.
“The buyers love these crossbred calves,” Babler says. “They have figured out how to get them to perform, and they show up on time. None of this is going to change.”
He believes that dairies bring more to the table than just animal performance. They also bring traceability, which could create additional opportunities for premium value.
“When you get into the packer community and start having conversations, not only do they love them, but there’s an extra set of opportunities attached to this animals,” Babler says. “Producers know their breeding decision, when that calf was born and every treatment it received, all the way up to that point of sale.”
That combination of predictability and traceability is why he believes beef-on-dairy brings more to the table.
“I’ve said for the last years it’s my belief that premium beef in the United States will be held largely by dairymen because of the extra benefits that these animals bring as they go to market,” Babler says.
Babler adds that the impact is clear on farms right now, and even when the market eventually levels out, the interest and value of these calves are here to stay.
“We have all realized the benefit of beef revenue on the dairy right now,” he says. “I’m really optimistic about where this beef and dairy intersection is going. We know that it may go higher, but we also know there’s going to be a reset. We just don’t know when. The good news is that even when it resets, the amount of beef value and interest on these cattle I just don’t see going away whatsoever.”
A Long-Term Opportunity
Ask any producer participating in a beef-on-dairy program and they will quickly tell you how it has become a major force in their farm’s profitability. Record-high prices and strong demand from feedlots have made this market impossible to ignore.
For many operations, selling crossbred calves has become a regular part of the business. And in years of low milk prices, that extra value can make a real difference in keeping finances steady.
