In 2010, the U.S. imported 10 million pounds of butter. Eleven years later, that number had grown tenfold to 100 million pounds. By 2024, imports peaked at 176 million pounds, with Irish brand Kerrygold accounting for 65% of the market.
Then, almost overnight, everything changed.
In 2025, American dairy farmers made enough butterfat that the U.S. transformed from a massive butter importer into a butter exporter — and 80% of those exports came after August.
“This is a structural shift,” CoBank dairy economist Corey Geiger told attendees at the Center for Dairy Excellence’s conference in September. “This is not something that just happened overnight for any willy-nilly reason; it’s because we’re making a lot of butterfat.”
The Beef-Dairy Cross Revolution
The transformation isn’t just happening in the milk tank. It’s happening in the calving pen, and it’s being driven by an economic force that has nothing to do with milk prices: beef-on-dairy calves.
“Dairy cow growth is at the largest population since 1991, and it is not being driven by the returns in the milk check,” Geiger says. “It is being driven by protein nuggets being born every nine months after you breed a cow. It’s black-headed calves.”
Holstein bull calf prices, which six years ago were nominal at best, have surged to five times those levels. Even as prices have moderated from their peak, the economic incentive remains powerful.
The impact is visible in USDA data. Since Labor Day 2023, U.S. dairy farmers have culled 457,000 fewer cows. Meanwhile, the percentage of dairy animals going to beef harvest has shifted dramatically. In 2022, the weekly flow was steady and predictable. By 2024, the pattern had completely transformed, with fewer dairy cows and more beef-cross animals heading to processing plants.
The Genomic Testing Acceleration
Underpinning this shift is a technology that has quietly revolutionized dairy breeding: genomic testing.
In 2009, Geiger wrote one of the first public articles about genomic technology with USDA researcher Curt Van Tassell. Initially, the industry used it just to identify elite animals, then farmers began testing heifer calves to determine which should stay in the dairy herd.
Today, 20% to 25% of all calves born in U.S. dairy herds get a hair sample pulled for genomic evaluation. If the results show a promising dairy animal, the calf stays. If not, it enters a “second career” — increasingly as a beef animal.
“This is a triple play taking place on our farms,” Geiger explains. “It’s shifting milk composition. It’s shifting what we’re sending out of our farms in terms of crossbred animals. And it’s shifting breeding decisions.”
The data shows the impact: Jersey breed semen sales, which peaked at 15% of the market five years ago, have fallen to 10%. The reason? Frame size matters when the calf’s destination is the beef market, not the milking parlor.
The Export Transformation
The U.S. dairy industry’s evolution extends far beyond butter. When the U.S. Dairy Export Council formed in 1995, the country exported just 2% to 3% of its milk production. Today, that figure stands at 17% — and domestic milk production has grown 44% during the same period.
May 2025 marked a historic milestone: the first time in U.S. history that cheese exports exceeded 110 million pounds in a single month. Since then, monthly exports haven’t fallen below that threshold, with recent months topping 140 million pounds.
“Out of the big three — the EU, New Zealand, and the U.S. — we have the lowest cheese prices among major exporters,” Geiger notes. “Because of that, we’re selling a lot of cheese.”
The U.S. has now reached a tipping point: Americans export more dairy products than they consume in traditional fluid milk forms. This represents a fundamental shift in the industry’s orientation from primarily domestic to increasingly global.
The Consumer Stratification
But the domestic market remains critical, and it’s fracturing in ways that have profound implications for dairy.
Geiger highlights a revealing analysis of American consumer spending by income quintile. The top 20% of households — earning over $250,000 annually — spend just 8.1% of their income on food, totaling about $17,000. The bottom 20% spend 32% to 33% of their income on food, totaling just $5,300.
“This is the best slide that economist Corey has ever seen when it talks about a consumer,” he says. “Consumers are different. What’s your income level matters.”
This stratification is playing out in real-time sales data. Quick-service restaurant sales — McDonald’s, Wendy’s, Burger King, Pizza Hut — are down year over year.
“That is the American consumer that’s struggling; that is eating more at home and not going to restaurants,” Geiger explains. “That is impacting domestic cheese sales.”
Meanwhile, high-income consumers are driving demand for premium products. A Kansas State University and Arizona State University study found that consumers using GLP-1 weight loss drugs are willing to pay up to $29 per pound for premium beef — nearly double the $16 threshold where average Americans start looking for alternatives.
“If I’m eating 70% of the calories I used to eat, I want to eat something that tastes good,” Geiger explains. “They actually have more money to spend now because they’re buying less food.”
Water Will Determine the Future
Looking ahead, Geiger identifies a critical constraint on dairy expansion: water.
“Outside of Idaho and Texas, most of the dairy processing growth is happening where there is water,” he says, displaying a map showing dairy cow growth concentrated in specific regions. “Dairy needs water. Crops need water. Cows need water.”
Idaho and Texas have each added over 70,000 dairy cows, leading the nation in growth. But the Crescent region and Great Lakes states are also expanding, driven by water availability.
Geiger also highlights a striking geographic imbalance: The Southeast has 26% of the U.S. population across 16 states but only 9% of the nation’s dairy cows — and that number continues to decline.
“In the United States, we are going to have to evolve our milk marketing to meet consumers in these other areas,” he says, displaying a map showing which states produce enough milk for their populations and which must import it.
The Path Forward
For dairy producers navigating this transformation, the message is clear: The industry is in the midst of overlapping revolutions — genetic, economic and geographic.
The beef-dairy cross phenomenon has created a new profit center that’s sustaining herd sizes even when milk prices struggle. Genomic testing is accelerating genetic progress while simultaneously identifying which animals should exit the dairy system. And the U.S. is rapidly evolving from a butterfat-deficit nation dependent on imports to an export competitor on the world stage.
“We have reached a point that we’re exporting more dairy products than we are drinking in traditional forms,” Geiger summarizes. “This is a structural shift in how American dairy operates.”
As the industry gathers at World Dairy Expo this fall, these transformations will be top of mind. The American dairy cow — and the industry built around her — is changing faster than at any point in modern history.
And the changes are just beginning.
