The world’s top 10 largest dairy groups now collectively milk 1 million cows, with the U.S., China, Russia and Saudi Arabia emerging as the dominant players on the global dairy stage.
Drawing from reports published by the International Farm Comparison Network (IFCN) and supplemented by information from leading feed and feed additives companies, Cainthus, a dairy technology company, put together an analysis of how dairy farms are getting larger.
A Global Trend Towards Bigger Farms
According to the IFCN, 116 million dairy farms milk over 260 million cows globally. Cainthus’ analysis of the top 100 dairy farms identified that just ten of the largest farms milk over 1 million cows, four of which are in China, four in the U.S., and one in Russia and Saudi Arabia respectively. In recent years more large-scale dairy farms have beenestablished in the U.S. and China, while existing farms seek to grow the size of their operations. Larger herd sizesdeliver economies of scale, allowing farmers to make a larger profit in times of increased feed costs, tight margins, fluctuating milk prices and also improves the ability of the dairy industry to respond to disruptions. IFCN research (2019) showed that larger farms also outperform smaller farms in terms of economic, environmental and sustainability metrics.
Chinese Consolidation
Dramatic changes in China have seen the number of farms with more than 1,000 cows increase from 112 in 2002 to more than 1,350 by 2017 (source: PwC). China Modern Dairy is now the largest dairy farm in the world, milking 135,000 cows, and it produces 3,300 tons of raw milk every day.
The top 100 farms list includes 24 from China, and this number is expected to continue to grow in the coming years. The Chinese demand for milk has increased dramatically following commitments from the government to stimulate consumption, especially among young people, resulting in the average Chinese going from barely drinking milk at all to consuming over 60 pounds of dairy products a year (in comparison to the U.S. where it is over 600 pounds per person a year). A report by PwC (2019) mentions that China’s goal is to increase annual domestic production by 40% to 45 million tons by 2025.
America Amalgamating
There are 55 U.S. farms in the top 100, and consolidation continues throughout the country. According to the USDA, the number of U.S. dairy farms is shrinkin,g but overall milk production continues to increase. The U.S. had 34,187 dairy farms in 2019, about half the number of farms compared to 2002. The number of dairy farms licensed to sell milk fell by 15% between 2017 and 2019. While in 1987, half of all cows milked were in herds of 80 or more; by 2017, the median herd size had risen to 1,300 cows. According to the USDA, the pace of dairy consolidation far exceeds the pace of consolidation seen in the rest of U.S. agriculture.
Self-Sufficiency in Russia
With 10 Russian farms in the top 100, EkoNiva-APK Holding is the largest farm (No. 5 globally), milking 101,000 cows. Like China and the U.S., the number of smaller dairy farms in Russia continues to fall. Farm consolidation and exits have proceeded at an unabated pace. Russian farmers increasingly employ hired workers and managers, operate fields or livestock herds at several locations, rely on outside service providers, and integrate into the value chain (source: Journal of Agricultural Economics, 2019).
Since 2013, milk production in Russia has increased by 3-4% per year. Russian government policy has supported investment in agriculture, but this was accelerated five years ago when a boycott of Western products gained support from Putin’s central government. To date, Russia still depends on imported milk, but the country has ambitions to become self-sufficient. In 2018, the Russian Ministry of Agriculture announced that at least 800 more large farms should be built.
Producing Dairy in the Desert
Of the top 100 largest dairy farms in the world, four farms are located in Saudi Arabia. Saudi’s Almarai is the 4thlargest dairy farm in the world, milking 107,000 cows, an astonishing number given that there were only about700,000 dairy cows in the entire country in 2019 (source: Statista).
Milking cows in such hot climes is challenging. Saudi farms, however, are experts in managing heat stress using a range of ventilators and water misters. Forages and concentrates were previously grown locally using irrigation, but today are imported from the U.S. and South America. The United Arab Emirates dairy market next door is projected to rise at a compound annual growth rate of over 7% between 2019 and 2024 thanks to a growing consumer taste for dairy products, driven by awareness of the health benefits for all age groups, coupled with the continuous introduction of innovative flavours (source: ResearchandMarkets).
Larger Farms Demand More Technology
As average herd sizes increase globally, the need for more technology on the farm rises. Large scale dairy operations have arguably greater issues than smaller farms with labor shortages, farm profitability and feed management, keeping animals healthy and maintaining high welfare levels. But because of their scale, they are also in a stronger position to solve these using technology. Heat detection, health monitoring and feed management are increasingly being monitored digitally and automated. Game-changing technologies such as cameras using artificial intelligence offer the ability to passively address feed management, which represents 60% of the cost of producing milk, and cameras and other sensors observe behaviour patterns such as lying time, drinking, and standing time all give insights that impact animal welfare, carbon footprint and productivity.
As dairy farms across the globe continue to increase and consolidate their herds, so too will the adoption of technology in the dairy industry accelerate and lead to further advantages for producers and consumers alike.
