Editor’s Note: This is one article in a series that is included in the 2025 Farm Journal’s State of the Dairy Industry report. The full 16-page report will appear in the May/June issues of Dairy Herd Management and Milk Business Quarterly and will be published in this space over the next several weeks. To download the full report for free click here.
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In recent years, dairy producers have faced a fluctuating roller coaster of milk prices, making it increasingly difficult to maintain profitability. However, many have managed to navigate these turbulent times by diversifying their income sources. By tapping into alternative revenue streams such as beef-on-dairy operations, agritourism, on-farm processing and carbon markets, producers have found innovative ways to stay in the black despite lackluster mailbox prices.
Our survey indicates approximately one-quarter of dairy producers have implemented alternative land or dairy add-on revenue streams. This shift is a testament to the agility and adaptability within the industry, as producers explore various avenues for profitability. Although there is considerable interest in these alternative revenue streams, most dairy operators do not have immediate plans to expand their businesses in this direction over the next three to five years.
A Popular Choice: Beef-on-Dairy
Not surprising, among the diverse strategies being employed, beef-on-dairy practices have emerged as a popular choice. With the U.S. beef cattle herd reaching its smallest size in 64 years thanks to persistent drought and strong cattle prices that discourage retaining heifers, dairy farmers are meeting the call to produce beef-on-dairy crossbreds to satisfy growing demand.
Nearly three-quarters of operators are engaged in at least one beef-on-dairy practice, with breeding and raising being the most prevalent methods. Despite a decline in the number of producers raising animals under their beef-on-dairy operations in the past year, there is an increase in the sale of branded beef products.
National Association of Animal Breeders reported beef-on-dairy semen sales grew by about 317,000 units in the U.S. in 2024. Phil Plourd, president of Ever.Ag Insights, highlighted the economic rationale behind these developments. He notes the $900 price for a day-old beef calf presents a much more reliable investment than the inherent risks and unpredictability associated with raising a dairy heifer. This is a significant consideration for producers, especially given the record-high dairy replacement prices observed in 2025.
Dale Woerner with Texas Tech shared at the Milk Business Conference he believes beef-on-dairy crossbreds have added immense value to the beef supply chain and should be seen as a long-term solution.
“Beef-on-dairy crossbreds have added enough value to the beef supply chain that we should never change what we’re doing. We should continue creating these crossbred cattle for the future,” he said.
Strategies for Success
The survey reveals the majority of producers selling beef-on-dairy calves do so within the first week of birth, with many also opting to raise them on-site. This approach allows producers to capitalize on early sales and effectively manage resources.
The dairy industry is witnessing a notable shift toward alternative revenue streams as producers seek stability and growth amid uncertain market conditions. By embracing innovative practices such as beef-on-dairy, agritourism, on-farm processing and carbon markets, they are not only ensuring their current economic well-being but are also setting the stage for sustainable future growth. As these practices gain traction, it will be interesting to observe their long-term impact on the overall dynamics of the dairy sector.
Through diversification and innovative strategies, producers are not just navigating present challenges but are also building a resilient and sustainable future for the industry.
