At World Dairy Expo in Madison, Wisconsin, the conversation among industry leaders highlighted the complex dynamics shaping today’s dairy and broader agricultural markets. From volatile milk prices to the rise of beef-on-dairy, and from export dependence to uncertainty with China, producers and analysts agree: resilience and adaptation are more critical than ever.
Milk Prices Under Pressure Despite Protein Craze
Milk prices are a few dollars lower than they were at this time last year. The slump is happening even as global demand for protein continues to climb.
“We have more cows, productivity per cow is rising, and butter fat prices have dropped,” said Dan Basse, founder and president of AgResource Company. “When dairy farmers see a profit, they expand their herds—it’s a cycle we’ve seen many times.”
While producers are benefiting from selling bull calves at higher prices, Basse noted that milk margins remain tough unless farms are operating at scale.
Domestic Demand Stalls, Exports Carry the Load
Mike North, principal at Ever.Ag, pointed to soft consumer demand as another factor holding milk prices back.
“We’re basically flat,” North said of domestic dairy demand. “Consumers aren’t going to restaurants like they have, and restaurant chains have had to push new value propositions to bring people in. Without that, demand is sour.”Exports, however, have hit record highs. North emphasized that without international sales, the U.S. dairy industry would be facing far worse price pressures.
Beef-on-Dairy Provides Major Boost to Farm Revenue
For producers like Ken McCarty of McCarty Dairy, one bright spot has been the rapid rise of beef-on-dairy, which has transformed once low-value Holstein bull calves into a significant revenue stream.
“We remember the days when we were trying to sell Holstein bull calves, two for five dollars, and you couldn’t get rid of them,” McCarty recalled. “Today, those sales can account for around 50% of our overall revenue.”
Basse predicted that strong beef-on-dairy calf prices will likely persist for at least the next two to three years, given the shortage of beef cow numbers in the U.S.
The Road Back to Higher Milk Prices
While beef-on-dairy is helping offset losses, producers remain eager for milk checks to rise. North stressed that recovery depends on stronger domestic demand and improvement across product categories.
“Butter is back to $1.60—we haven’t seen that since COVID—and cheese is about the same,” said North. “Until we get lift across all categories, we’re not going back to those $20-plus milk prices.”
He added that beef-on-dairy is effectively providing $3 to $4.50 per hundredweight in revenue to help fill the gap.
On-the-Ground Challenges: Labor and Rural Stability
Beyond markets, McCarty pointed to labor shortages and rural economic health as ongoing concerns.
“We don’t have the luxury of taking Christmas Day off,” McCarty said. “Accessing quality labor is a huge issue. But equally concerning is market volatility and what that means for our neighbors. When downturns hit, we worry about the long-term vibrancy of our rural communities.”
Trade, China, and Grain Markets Add More Uncertainty
The discussion also touched on broader ag markets. Basse expressed skepticism about any major new trade deal with China, noting that the country views the U.S. as an unreliable supplier.
“I’m doubtful of a deal with China,” Basse said. “It does tell us that we’ve had short coverings with China, I think we don’t need to think of China as the phase one agreement that was done before. That will not happen. This may be somewhat off some some modest deals, if you will. But I think when you think of China, it sees the United States as an unreliable supplier. “We came to them, beat them up at 18 and 19. They began paying back, you know, with a phase one deal. And then the Biden administration said. Nothing. And here we are negotiating again. So when I think about China, I am not optimistic they’re going to come back in a big way for U.S. corn, soybeans or other products.”
North added that without Chinese demand, soybean markets remain capped, especially as Argentina re-emerges as a competitive supplier with the elimination of its export tax. Meanwhile, bearish grain stocks reports continue to pressure corn markets.
A Balancing Act for the Future
Taken together, the dairy industry sits at a crossroads: global exports are providing a lifeline, beef-on-dairy is reshaping farm economics, but stagnant domestic demand, volatile grain markets, and persistent labor issues are limiting growth.
For dairy farmers like McCarty, survival means not just managing milk margins, but also navigating the ripple effects on their communities.
“We depend on our neighbors for feed, and they depend on us,” he said. “If rural America can’t stay strong, neither can the dairy industry.”
