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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The future of the dairy industry faces significant challenges as a large portion of its operators approach retirement without having formalized succession plans in place. Our survey documented that a quarter of operators plan to retire within the next five years. This trend is understandable as 22% of these operators are over the age of 65, and 28% are aged between 55 to 64 years old. The next generation’s involvement is crucial, yet only 56% of operators under 45 are considering adding a family member as a partner in the coming years.
Industrywide Challenge
Despite its critical nature, only two in five operators have a defined succession plan, with larger operators more likely to have such plans. The lack of plans to transfer critical operational knowledge and business practices to successors is alarming. According to recent data, 59% of operators either lack or are unsure about having a defined succession plan. However, there is a silver lining: the percentage of operators with a defined plan has increased by six points since 2024, indicating a rising awareness of the importance of strategic planning.
Eye on Expansion and the Future
Looking ahead, nearly half of the operators plan to expand their operations within the next five years, whereas a similar proportion intend to maintain their current herd size. Compared to last year, fewer operators are planning to expand by adding additional sites. Interestingly, only 5% intend to reduce their herd size, with a small fraction, about 3%, planning to exit the business entirely from a lack of profitability or successors. One respondent admitted, “No one in the family wants to take over.” Another cited the difficulty of handing over the operation to the next generation as a significant barrier.
The evolving demographics within the dairy industry show the importance of robust succession planning. As the industry grapples with the imminent retirement of many of its operators, it must address the gap in succession plans to safeguard its future. By prioritizing these discussions and plans, the industry can ensure a seamless transition that maintains stability and continues the long-standing tradition of passing on family farms to the next generation.
