Here’s something to think about: It’s never been smart to bet against the U.S. dairy industry, and now wouldn’t be a good time to start.
From Waste to Wealth
Prior to about 40 years ago, for example, the dairy industry viewed whey as an essentially useless byproduct of the cheesemaking process. Today, it’s a multi-billion-dollar enterprise offering real returns to producers and processors alike. And there’s still upside as protein mania sweeps across the U.S., pumping up sales of sports nutrition products and other foodstuffs that rely on whey as an ingredient.
A little more than 10 years ago, markets told dairy producers that butterfat had tremendous value, with spot butter prices crossing the $3/lb. mark for the first time. What did they do? They leaned into genomics and genetics and retooled feeding protocols to send fat tests soaring from an average of 3.74% in 2014 (the year of the famous “Eat Butter” Time magazine cover) to 4.32% in 2025, staggering growth few would have believed possible on the front end. And, growth that boosted farm income with only modest cost.
Roughly five years ago, an emerging (and material) supply deficit in the beef industry aligned with dairy heifer oversupply and improved technology to create an opening for beef-on-dairy breeding. This quickly became a significant source of additional revenue for dairy producers, amounting to $4 per hundredweight or more by some counts. That revenue provides a buffer against occasionally faltering milk prices.
Face Headwinds with a Proven Track Record
I see some challenges as 2026 unfolds. Domestic cheese demand may be structurally flattening. We might have too much butterfat, with many processors rooting for producers to figure out ways to dial up protein output instead. Labor availability and spiraling energy costs are creating challenges across the supply chain. At the same time, given historical resilience and at least some light tailwinds, I’m confident this will be at least an OK year for dairy producers and the larger industry.
