The dairy industry has flipped upside down, and Mike North from Ever.ag has the numbers to prove it.
“People are legitimately making cheese for the whey, and cheese has become the byproduct,” North told AgriTalk host Chip Flory at World Dairy Expo, describing a transformation that would have sounded absurd just a few years ago.
It’s the tail wagging the dog — and it’s keeping Class III milk at $15.52 when it would be sitting at $13 under the old business model.
Welcome to dairy’s new reality, where what used to be waste is now worth more than the product itself and beef calves from dairy cows are a big revenue source keeping operations in black ink.
The Whey Revolution: From Waste to Wealth
North laid out the economics that are reshaping dairy processing across the country.
“What used to be the byproduct, what used to be the thing that was kind of ...” North paused, searching for the right way to describe just how dramatically things have changed. “Cheese is the byproduct now.”
Whey protein concentrate (WPC) and nonfat dry milk powder (NFDM) products are selling for $9 to $11 per pound.
“That’s 10 times where that was just a few years ago,” North says.
Meanwhile, cheese is trading around $1.20 to $1.30 per pound — still valuable, but nowhere near the premium commanded by high-protein whey products.
“If we had to lay it up against that $1.20, $1.30 cheese market right now, you’d be talking about $13 milk under the old regime,” North explains. “This big protein market has done us a lot of favors, both on Class III and IV, with higher skim milk powder and higher whey prices.”
What Changed?
The protein boom happened. Consumers want protein in everything, from sports nutrition to infant formula to everyday food products. Even Kraft mac and cheese is being fortified with protein now.
“The role of protein in the human diet — protein is an attractive thing again,” Cole Ruprecht, dairy key account manager with United Animal Health, said earlier in the broadcast.
That consumer demand has completely rewritten the economics of dairy processing.
Cheese plants that used to struggle with whey disposal are now building facilities specifically to capture whey value. The cheese? It’s almost an afterthought.
“You’ve got some big moves on nonfat, some big moves on whey — that’s anchoring prices,” North says. “Unfortunately, butter and cheese feeling some pressure, pulling in the other direction.”
Beef-On-Dairy: The Other Tail Wagging the Dog
North also points to another former “byproduct” that’s become essential: beef-on-dairy calves.
“That’s been a big revenue source for us for the last several years, and that’s certainly playing a big role too in keeping things in black ink,” North says.
Ruprecht agrees, calling it “one of the biggest changes happening in the dairy industry right now.”
“How do you feed these calves? Who’s going to raise them?” Ruprecht says. “If you’re retaining them for replacements, what is that like compared to a conventional Holstein or purebred dairy calf?”
There’s uncertainty, sure, but there’s also opportunity — and revenue that’s keeping dairy operations viable when milk prices alone wouldn’t cut it.
The Market Picture: Optimism Meets Reality
Despite the challenges, North says World Dairy Expo brings out optimism.
“Whether it’s been a tough year, everyone is excited to see the latest and greatest,” Ruprecht notes. “A lot of optimism for the future.”
Part of that optimism comes from dairy’s changing value proposition.
“We’re in a pretty unique and fun place in the dairy industry because we have a very attractive product to the general population,” Ruprecht says.
The Current Market Snapshot
Class III milk futures: $15.52. “Can we build on that?” Flory asked.
North is cautiously optimistic but notes that as you look forward into future months, “it starts to get a little bit darker.”
The value drivers:
- Whey and powder — holding strong, anchoring prices
- Cheese and butter — feeling pressure, pulling prices down
- Beef-on-dairy calves — adding critical revenue
“We have swapped out the normal value play that we have in Class III and Class IV coming historically out of cheese and butter and rolled that over into whey and powder,” North says.
What It Means for Dairy’s Future
This isn’t a temporary shift; it’s a structural transformation.
Cheese plants are being built and located based on whey export access and protein product demand — not just cheese markets.
“People are going to chase after it,” North says, referring to the high-value whey products commanding $9 to $11 per pound.
Meanwhile, producers’ herd management strategies are evolving. Dairy farmers are making breeding, feeding and management decisions around:
- Maximizing milk components (protein and fat) for whey value.
- Beef-on-dairy calf production for additional revenue.
- Calf health and growth to capture beef market premiums.
The Risk
What happens if the protein boom fades? If whey markets soften? If beef-on-dairy cattle flood the market and values drop?
“Without question, we definitely saw a move towards a better fundamental picture,” North says, discussing broader commodity markets. But he also cautions against over-optimism, particularly around export demand.
The same caution applies to dairy’s byproduct revolution: It’s working now, but it’s built on consumer trends and global markets that can shift.
The Corn Market Curveball
In a side conversation about the quarterly grain stocks report, North revealed USDA dropped 170 million bushels on old-crop corn stocks — a move he’d been expecting.
“I’ve been saying this for a while: I ultimately am expecting that they’re going to come back and say, well, that feed number maybe was a little bit bloated,” North says.
The new crop outlook: With ending stocks now at 2.095 billion bushels for 2025-26, beginning stocks for 2026-27 sit around 1.74 billion bushels.
“That’s still enough to get a little bit excited about,” North says. “But let’s not forget that just two years ago we had an ending stocks number that was 1.5 and we still had $4 corn.”
The export question Flory asked: “Are we going to repeat the exports that we had in 26-27 like we had in 25-26?”
“I don’t think we’re going to. I think there was a lot of forward buying, getting ahead of this tariff discussion, all the shakeup in the Middle East. People worried about corn getting ultra expensive,” North shares.
The Bottom Line
North’s message from World Dairy Expo is clear: Dairy’s business model has fundamentally changed.
What used to be byproducts — whey and beef calves — are now primary profit drivers. What used to be the main products — cheese and butter — are feeling pressure.
“This big protein market has done us a lot of favors,” North says.
The question is whether those favors will keep coming — or whether dairy farmers are building business models on trends that could shift as quickly as they arrived.
For now, the tail is wagging the dog. And as long as consumers keep demanding protein and beef-on-dairy calves keep commanding premium prices, dairy farmers will keep chasing the value wherever it shows up.
Even if that means cheese becomes the byproduct.
