As we inch closer to the second half of 2025, the outlook for profitability for dairy producers is a topic of significant interest. Ben Laine, a dairy analyst with Terrain, shares that while 2025 is not shaping up to be an exceptional year in terms of profits, it is still manageable.
One of the key factors affecting profitability is feed prices, that have softened compared to the past few years. Alongside manageable feed prices, there is solid demand for dairy products, and exports have been strong. In fact, amid domestic challenges, the U.S. dairy export volume, measured in milk solids equivalent (MSE), grew by 3% in March, marking the highest monthly export volume since February 2023. Despite the looming concerns about trade situations and tariffs, there are signs that these issues are beginning to stabilize.
Exploring Alternative Profit Sources
Laine highlights how dairy producers have been diversifying their income sources to help during volatile milk prices over the past several years to enhance their cash flow. He points out initiatives such as incorporating beef on dairy, which represents an alternative revenue stream beyond the traditional focus on milk production.
Dan Basse, president of AgResource Company emphasizes that the production of beef-on-dairy crossbreds needs to be in every dairy herd. He doesn’t foresee an end to this demand any time soon, noting that the market is attempting to incentivize dairy producers with substantial financial offers, with some wet calves generating $1,000 plus, indicating a stable market through at least 2028.
Other sustainable revenue avenues that are gaining traction include the use of digesters and carbon credits. These strategies not only add to the revenue but can also act in a counter-cyclical manner, helping to mitigate fluctuations in income that are typical in agriculture.
Innovative Practices at MVP Dairy
The ethos of sustainability is also shared by MVP Dairy in Selena, Ohio. Ken McCarty, one of the dairy owners, says their business model is crafted with a focus on social, environmental and animal welfare components, alongside economic viability. McCarty asserts that their partnership thrives on a shared commitment to these values.
On their expansive 4,500-acre farmland, MVP Dairy’s dedication to a holistic approach is evident. Emphasizing manure management, soil health, biodiversity and animal welfare, the family has made significant strides in sustainable agriculture. Methods such as no-till farming, grid soil sampling and precision irrigation showcase their dedication to reducing environmental impact.
The results are impressive. Last year alone, their sustainable practices led to a reduction of 6,755 tons of CO₂ emissions, akin to the annual energy usage of 662 American homes. Their modern manure management system not only curbs emissions by 60% compared to traditional systems but also provides irrigation water, underscoring how innovation drives sustainability forward.
As producers continue to innovate and seek diverse income streams, the focus remains on leveraging existing operations to find value beyond the milk check. This approach is becoming increasingly important in smoothing out the volatility associated with dairy farming.
By adopting innovative strategies and expanding income sources, dairy producers can better navigate the challenges and opportunities that 2025 presents, ensuring a more stable financial future.
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