According to Corey Gillins, chief milk marketing officer for Dairy Farmers of America (DFA), the dairy industry isn’t just changing — it is right-sizing. In a recent candid conversation, Gillins laid out a roadmap of an industry in the midst of a profound transition. It is a story marked by a sobering decline in the number of farm families, but countered by a resilient surge in efficiency, strategic diversity and a sophisticated approach to risk the industry has never seen before.
The Numbers: A Story of Consolidation and Scale
The shift in DFA’s membership over the last five years tells a stark story of consolidation. In 2021, the largest dairy cooperative in the U.S. represented approximately 6,500 member-owners. Today, that number has tightened to 4,600. Looking ahead, Gillins doesn’t see the trend slowing; he forecasts that within the next five years, the number of member farms will likely fall below 4,000.
However, Gillins is quick to point out this is not a story of a dying industry, but rather a consolidating one. While the number of farmers is decreasing, the cows are simply moving to different barns. Five years ago, the average DFA herd size was 375 cows. Today, it has jumped to surpass 500.
“We’re not losing dairy cows,” Gillins notes. “We’re losing dairy farmers. But those who stay in the business have a tremendous opportunity ahead because global demand for dairy protein is incredibly strong.”
The Beef-on-Dairy Exit Strategy
Perhaps the most fascinating shift Gillins identified is how the beef-on-dairy trend has fundamentally changed the way farmers retire. Historically, exiting the dairy business was often a somber, forced conclusion — a result of running out of equity or running out of steam. Today, high beef prices have turned the exit into a strategic, profitable lifeline.
“I know of several farms that have pivoted to breeding 100% of their cows to beef,” Gillins shares. “Their strategy is simple: ‘I’m going to capture every bit of profit from these high-value black calves, and when I run out of cows, I’ll be done.’”
With both milk cow prices and beef-cross calf prices at historic highs, producers finally have the leverage to write their own plan. Whether they choose to ride the wave a few years longer or sell the herd while the market is peaking, the beef-on-dairy phenomenon has provided a dignified, lucrative exit ramp that didn’t exist a decade ago.
The Geography of Growth: Winners and Sunsets
The rightsizing of the industry isn’t just happening in the ledger books; it’s happening on the map. Gillins points to specific pockets of excitement where processing capacity has unlocked the ability to grow. Michigan and New York have seen a resurgence because new processing plants have created a home for additional milk. Meanwhile, the Texas Panhandle and southwest Kansas continue to be magnets for large-scale production.
Surprisingly, a new frontier is emerging in the Southeast.
“We’re seeing a real desire to grow in southern Georgia and northern Florida,” Gillins says. “That’s a big change from five years ago. Shifts in other agricultural categories are making land and feed more available for dairy in those areas.”
However, the sun is beginning to set on other traditional dairy hubs. New Mexico has seen a significant decline, and California remains a constant challenge. In the Golden State, producers are faced with a combination of regulatory hurdles nd skyrocketing costs. As fluid milk plants remain near urban centers, the cost of moving milk over longer distances is creating a geographic squeeze that is hard to overcome.
The $13,000 Hurdle: Inflation and Labor
Even in growth-friendly areas, two massive roadblocks stand in the way: labor and inflation. Labor remains the undisputed No. 1 concern for producers. The crisis has reached a point where it is actively stifling expansion. Gillins recalls a producer with two large, successful dairies who recently passed on a third location — not because the economics didn’t work, but because he couldn’t guarantee he could find the people to milk the cows.
“Labor is huge,” Gillins says. “Without a reliable pathway for the workers our farmers rely on, growth remains a high-risk gamble.”
Compounding the labor shortage is the staggering cost of modern infrastructure. Pre-COVID, building a new dairy was a significant investment; today, it is a monumental one. Gillins estimates building a green site dairy now costs between $10,000 and $13,000 per head. At those prices, there is zero room for error.
The Shield: Sophisticated Risk Management
Because the stakes are so high, average management is no longer an option. This has led to a revolution in risk management. Ten years ago, a farmer might have hedged their milk price but left their feed costs to the mercy of the market. In 2026, that is a recipe for disaster.
“Many of our members are getting incredibly sophisticated,” Gillins explains. “They aren’t just looking for the cheapest cost; they are looking to eliminate volatility.”
Modern risk management is now a two-sided equation. Producers are using DFA’s risk management teams to lock in margins by hedging both the milk check and the input side — fuel, feed and fertilizer.
“It’s about knowing your costs 12 months down the road,” Gillins says. “If you can lock in a margin that works, you take it. You can’t budget on hope anymore.”
The Bottom Line: Resilience and Honor
Despite the decline in farm numbers and the jarring costs of doing business, Gillins remains bullish on the American dairy farmer. The great rightsizing happening on farms all across the U.S. is creating a leaner, smarter and more efficient industry.
“The diversity of our membership is our strength,” Gillins concludes. “Whether it’s the small Amish and Mennonite farms in the Northeast that ‘hang in there’ through every cycle or the 10,000-cow innovator in the Southwest, there is a place for everyone who is willing to adapt.”
The honeymoon of easy premiums may be over, but the marriage between innovation and grit is stronger than ever. For the modern producer, the message is clear: the industry is getting smaller in numbers, but it is growing in its ability to feed a hungry world with precision and honor.
