Dairy farmers are standing on shaky ground. Milk checks are tight and input costs are up, but replacement heifers and beef-on-dairy calves are providing an unusually strong backstop. As Gregg Doud, president and CEO of the National Milk Producers Federation, puts it, dairy is in a “very weird situation” right now.
Beef-on-Dairy Helps Pay the Bills
With today’s market conditions, many dairy farmers are finding that the most valuable part of their operation is not in the parlor, but in the maternity pen.
“The milk check is not much,” Doud told “AgriTalk” host Chip Flory during Farm Journal’s 2026 Top Producer Summit. “But those calves are worth so much.”
In some regions, that beef-on-dairy value is staggering.
“The latest number I heard in the Northeast recently, a black day-old calf [is worth] $1,600,” Doud adds. “You talk to [dairy farmers] and they say, ‘We’re in the beef business now.’”
At a time when the milk check alone is not enough to carry the operation, beef-on-dairy has become a financial lifeline that is helping many farms stay profitable.
“Beef-on-dairy doesn’t have 100% penetration into the industry, but it’s close,” Doud says. “I would say it’s over 75% at this point.”
This shift is reshaping how farmers think about cow value, reproductive decisions and even culling strategies. A cow is no longer evaluated only on her milk production or longevity, but on the value of the calf she is carrying.
“If a cow is pregnant, she’s staying,” Doud adds. “The calves are worth too much to ignore.”
Fewer Replacements
That shift, however, comes with consequences for the future makeup of the herd.
With so many breedings going to beef, Doud says the number of replacement dairy heifers in the industry has dropped to levels that are noticeably short.
“The number of replacement dairy heifers is way below what it ought to be,” he says. “So, this is going to be interesting, and there could be a big swing in cow numbers at some point here.”
Doud notes the current reduction in replacement heifers is something the industry is watching closely.
Risk Management Remains Essential
As producers navigate all the shifting pieces in today’s market, Doud draws a firm line on risk management. In a margin environment like this, Dairy Margin Coverage (DMC) and Dairy Revenue Protection (DRP) are not optional tools in his mind. They are essential.
“The Dairy Margin Coverage program for dairy is something that I think everybody in agriculture needs to look at,” he says. “It kicks in when you need it.”
Although DMC has limits on how much milk can be covered at the highest level, Doud notes it still works well for most dairies. He follows that point with strong encouragement for producers to also consider DRP, explaining it offers another way to safeguard milk income by allowing farms to insure a portion of their future revenue against market swings.
“Every dairy farmer in America, my goodness, if you are not signed up for DMC and also DRP on the insurance side of the equation, get signed up for these things,” he adds.
In his view, these tools were designed specifically for moments like this, when margins are thin and markets are unpredictable.
Cautious Optimism in an Uncertain Market
Looking ahead, Doud acknowledges milk checks are likely to remain tight, but the value of beef-on-dairy calves is helping farms navigate a difficult margin environment.
With additional dairy processing capacity coming online and continued demand for protein, he is hopeful milk prices will improve. In the meantime, he views risk management tools and beef-on-dairy breeding decisions as practical safeguards for producers working through challenging market conditions.
