2026 State of the Dairy Industry Report

The Future of Beef-on-Dairy: What Happens When $1,200 Calf Prices Drop?

Thu, 28 May 2026 13:04:31 GMT

Editor’s Note: This is one article in a series that is included in the 2026 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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For the last several years, the beef-on-dairy trend has felt like a gift from the heavens. In a world of volatile milk checks and rising input costs, the ability to turn a low-value Jersey or Holstein bull calf into a high-value beef cross was the ultimate easy button for profitability. Producers called it a honeymoon — high premiums, easy sales and a massive boost to the bottom line with very little extra effort.

But our recent deep dive in the Farm Journal State of the Dairy Industry Report illustrates the honeymoon phase has officially ended. We’ve entered the era of beef-on-dairy 2.0, and the rules of the game have changed.

Our data reveals a critical shift is unfolding. The gold rush mentality is being replaced by a calculated, data-driven business strategy. While the total number of producers using beef genetics has dipped slightly, the complexity of the operations that remain is skyrocketing.

Here is how this new era is redefining the dairy-beef landscape:

From Any Black Calf to Data-Backed Value

In the honeymoon phase, as long as the calf was black, it brought a premium. In 2026, the feedlots and packers are getting pickier. The report shows a 5-point increase in the collection of vaccination information since 2025.

Packers no longer just want a crossbred animal; they want a verified animal. Producers are realizing that to maintain their premiums, they must provide a “passport” for every calf — health records, vaccination history and genetic proof.

The Retreat from Vertical Integration

One of the most telling findings in the 2026 report is fewer operators are retaining ownership of the supply chain or selling branded beef products.

A few years ago, the dream was vertical integration — breeding the cow, finishing the steer and selling the steak. The reality of 2026 has set in — finishing cattle and marketing beef is a different business with different risks. Producers are pulling back to what they do best, with the majority now choosing to sell wet cross calves within the first week.

(Farm Journal)

A Strategic Tool for Succession

Interestingly, the report finds producers with beef-on-dairy operations are more likely to have plans to bring in a partner or family member.

This suggests beef-on-dairy has evolved into a succession tool. By diversifying the revenue stream and adding a beef component, older operators are creating a more lucrative and attractive business for the next generation. It’s no longer just about a quick check; it’s about building a multi-generational business model that can withstand extreme market volatility and shrinking margins.

The 50% Threshold

While the hype might suggest every cow is being bred to beef, the data shows a more disciplined approach. Most producers are still breeding less than one-half of their herd to beef. However, over one-quarter of producers plan to increase their beef-on-dairy usage in the next three to five years. This indicates while the honeymoon is over, the marriage is solid. Producers are committed to the strategy, but they are becoming more surgical about which cows get the beef straw.

The New Standard

The perfect storm described by Curtis Bosma with High Ground Dairy has permanently moved the goalposts. As our industry moves into 2026, the average cow is being replaced by a specialized asset. Whether it’s through the $1,200-plus rebate or the data-backed verification required by packers, beef-on-dairy 2.0 is the new standard.

“There are cows in the herd today that might not economically deserve a spot based on their milk production alone,” Bosma says. “But farmers are keeping them because they are pregnant with a black calf. It’s essentially a rebate.”

For the modern producer, the message is clear: the honeymoon might be over, but the marriage between beef and dairy is the strongest pillar of support the industry has in an increasingly uncertain world.

Profitability Plunge: 28-Point Drop Puts Majority of U.S. Dairies in the Red for 2026

Tue, 26 May 2026 13:15:40 GMT

Editor’s Note: This is one article in a series that is included in the 2026 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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When you look out across the U.S. dairy landscape in early 2026, the view has changed. The vibrant, optimistic hues of a year ago have been replaced by what many producers describe as a gray skyline. It is a somber contrast to the outlook of 2025, revealing an industry that is simultaneously more resilient and more constrained than ever before.

According to the Farm Journal 2026 State of the Dairy Industry Report, which surveyed nearly 250 producers with herds exceeding 100 head, the financial mood of the U.S. dairy industry has shifted violently. We are no longer just talking about market cycles; we are witnessing a fundamental margin revolution that is testing the grit of even the most seasoned operators.

A Hard Reality Check

The most jarring data point in the report is the collapse of profit expectations. In 2025, 74% of producers expected to see a profit; however, only 61% actually saw one. That expectation versus reality gap has left a mark. For 2026, profit expectations have cratered to just 46% — a 28-point decline that signals a deep-seated caution.

This pessimism isn’t born of a single factor, but a perfect storm of margin compression. While milk prices remain volatile, input costs have reached a breaking point. As one producer bluntly noted: “Everything costs way too much compared to what we get paid for our milk.”

The Aging Infrastructure Trap and the Credit Crunch

Nowhere is this cost increase more visible than in the age of the infrastructure. Producers are finding the cost of simply maintaining the status quo has skyrocketed. One respondent pointed out that the cost of a manure scraping system has nearly doubled in just five years.

This creates a vicious cycle. To improve cow care and efficiency, producers need to replace aging equipment, but the credit crunch is making those investments nearly impossible. As optimism falls and profit expectations dip below the 50% mark, banks are beginning to climb a wall of worry. Financing has moved up the list of top challenges, leaving many producers in a Catch-22: They can’t afford to fix their facilities, but they can’t afford the inefficiency of keeping them broken.

No Money, No Fun

Beyond the balance sheets, the 2026 report captures a palpable sense of burnout. One quote from the survey summarized the sentiment with heartbreaking clarity: “No money, no fun. Nobody wants to keep milking cows.”

The emotional toll of working harder every year to make less is manifesting as a mental health crisis. This isn’t just about the barn floor; it’s about the psychological weight of a world that feels increasingly unstable. Producers cited global political uncertainty — fears of trade wars and even World War III — as factors that trickle down to their daily management decisions. When the world feels like it’s on the brink, the daily grind of the parlor feels heavier.

A Global Wall of Worry

This global anxiety is tied directly to policy pressure, and there is a specific fear that trade volatility will plunge the industry into economic dire straits, disrupting the very export markets that have become the industry’s primary growth engine. For a global nutritional manufacturer, a closed border isn’t just a political talking point; it’s a direct threat to the milk check.

Growth Amid the Gloom

Yet, in the midst of this sea of pessimism, a remarkable paradox emerges. Despite the 14-point drop in optimism, 45% of producers still plan to expand in the next five years.

Why double down when the wind is blowing so hard against the barn door? This is the expansion paradox. It reveals a strategy of resilience versus constraint. These producers aren’t just adding cows; they are adding sites and leveraging smarter milk strategies to out-manage the storm. They are bracing to weather the short-term impact because they believe in the long-term mission.

Grit in the New Economy

The 2026 State of the Dairy Industry Report reflects an industry in a state of high-precision evolution. The average cow and the average manager are being left behind. While the skyline may be gray, the grit of the American dairy farmer remains unchanged.

Driven by the immense responsibility and the profound honor of feeding a growing world, producers are proving while they may be working harder for less, they are working smarter than ever before. In 2026, the future of dairy isn’t just about the milk — it’s about the vision to see past the gray and build a more durable, resilient industry.

Embrace the Opportunities in 2025: A Bright Future for Dairy Farmers

Mon, 30 Jun 2025 13:00:00 GMT

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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As we step into 2025, uncertainty looms like the turning of a new page. With a new administration at the helm and ongoing discussions around tariff regulations, it’s understandable if current news headlines make those who run a business uneasy. This sense of anxiety is nothing new to many. Yet, within the agricultural community, particularly among dairy farmers, there exists perpetual optimism riding on the tides of hope.

Every spring, seeds are sown with a hopeful expectation that Mother Nature will fulfill her role, culminating in a bountiful harvest in the fall. Dairy farmers especially share this hopeful outlook despite dealing with perishable products like milk, which can’t be stored indefinitely like other crops. Market fluctuations affect their income variably, but the commitment and resilience among dairy farmers remain unwavering for the long haul.

Dairy’s Moment to Shine

Fortunately, positive news stirs within the dairy industry: leaders everywhere affirm that dairy’s time is now. With an increasing demand for diets rich in protein, dairy products are ideally positioned to satisfy this growing need. In addition, the prevailing low cattle inventory, the lowest in more than 60 years, creates favorable conditions for beef-on-dairy operations, indicating a potential boom as we move forward.

Chart the Course Forward

However, the crucial question remains: Are you ready to propel your operation forward through the uncertain fog toward the rainbow beyond?

In this era, technology increasingly influences dairy operations. Are these innovations part of your strategic plan? Engaging in these conversations within your family and farming business is essential sooner rather than later.

In the following pages, you’ll find insights from our 2025 Farm Journal State of the Dairy Industry report. We asked producers about their future investments, and this report embodies optimism, primarily due to the incredible dairy farmers we are fortunate to have — those who help feed the world.

By embracing change and capitalizing on evolving opportunities, dairy farmers can chart a course toward a prosperous future within this ever-changing landscape.

Despite Sunny Optimism: Ongoing Challenges Remain for Dairy Farmers

Thu, 26 Jun 2025 14:28:06 GMT

Rising Costs and Material Concerns

When we surveyed producers, obstacles such as inflation and the escalating costs of materials emerged as top concerns. These financial pressures, alongside sharply rising land costs, loom large over the potential for growth and expansion. Increased operational expenses, including those related to labor, equipment and inputs, stand as formidable barriers that must be navigated as producers strive toward future prosperity.

Labor Shortages: A Persistent Challenge

While the concern regarding availability of labor has slipped a bit in ranking, the issue remains significant. Frequent shortages and labor force hurdles are continually cited as obstacles preventing the achievement of growth milestones. With many dairy operations relying on non-family labor for at least half of their workforce, the challenge of finding and maintaining a dependable labor pool is a pressing issue that cannot be overlooked.

Regulatory and Environmental Hurdles

Another growing concern in the dairy industry is the maze of environmental and regulatory obstacles that dairy operators must traverse. Feedback from respondents highlighted increasing anxieties over inconsistent and burdensome regulations, particularly those surrounding environmental practices, labor laws and immigration. The impact of such obstacles is clear: They create uncertainty and heighten operational stress, which in turn hampers growth and expansion potential.

Market Volatility

Confidence in the milk market has emerged as a prominent challenge for growth. Producers express frustration over the volatile nature of milk prices, especially when coupled with rising input and operating costs.

Despite these challenges, there has been little change over the past year in anticipated investments for the next three to five years. Nearly half of the producers plan to replace or improve facilities and acquire additional acreage for growing crops. This trend signals a cautious, yet optimistic, outlook toward the future growth of the dairy industry.

Labor Challenges: A Call for Change and Innovation

Tue, 24 Jun 2025 13:00:00 GMT

Before and After the Pandemic

Labor challenges are not new to dairy farmers. The COVID-19 pandemic only exacerbated these struggles, and the discourse around mass deportation adds another layer of complexity to this issue, affecting not only individual farms but reverberating throughout the U.S. economy.

Ever-Present Labor Shortages

A recent survey underscores the dairy industry’s growing dependency on non-family labor, indicating it represents at least 50% of the workforce for many respondents.

In response, numerous farmers have turned to technology to reduce reliance on human labor. Although hiring and retaining workers remain challenging, there have been notable changes in labor-related aspects over the past year.

Boost Employee Incentives

Escalating labor expenses compound the difficulties faced by dairy farmers. One survey respondent observed, “Labor expenses continue rising, and our state isn’t allowing us to remain competitive with farmers in other states.”

To mitigate these issues, many farms have introduced incentives to bolster retention, including employee housing, flexible work schedules and wages surpassing the industry average. Over half of the survey participants provide housing for workforce stability and motivation.

The labor challenges afflicting the dairy sector are far from resolved. While innovative strategies and improved employee benefits offer temporary respite, deeper systemic changes are imperative. As the dairy industry contends with these formidable challenges, the call is for collective action and policy reforms that prioritize sustainability and security, ensuring a resilient future for U.S. agriculture.

Passing the Baton: The Importance of a Plan

Fri, 20 Jun 2025 13:00:00 GMT

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.

Past, Present and Future: Sustainable Efforts at Work

Wed, 18 Jun 2025 13:04:26 GMT

Adoption and Awareness

While there is a positive trend in adopting sustainable practices, there’s a palpable gap in program awareness. As environmental regulations grow stricter and market demand for sustainable products rises, carbon credits and Environmental, Social and Governance (ESG) practices can offer both financial and reputational advantages.

More than half of the respondents (63%) reported involving themselves in at least one sustainable practice. Notably, larger operations are more likely to practice sustainability, particularly in the Western region.

Untapped Potential

Despite potential benefits, only 20% of respondents currently participate in carbon credit programs — though 38% plan to begin within the next three to five years. The top reasons for non-participation include a lack of awareness and insufficient compensation. Interestingly, philosophical and attitudinal opposition are the main hurdles for the one-quarter who have decided against participation.

In the words of one skeptical respondent, “I think carbon credits are a fad and may go away with a struggling economy.”

Leading Sustainable Practices

The most commonly used sustainability practices include water recycling and feed additives for improving efficiency and reducing methane emissions. However, three in five respondents are unaware of two major industry programs promoting sustainability — Scope 3 and ESG programs.

Gaps in awareness, consumer demand and regulatory changes are ongoing challenges in the journey toward sustainability. Yet, with continued effort and awareness, agricultural businesses can ensure a healthy and sustainable future.

Diversified Revenue Streams

Fri, 13 Jun 2025 13:00:00 GMT

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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In recent years, dairy producers have faced a fluctuating roller coaster of milk prices, making it increasingly difficult to maintain profitability. However, many have managed to navigate these turbulent times by diversifying their income sources. By tapping into alternative revenue streams such as beef-on-dairy operations, agritourism, on-farm processing and carbon markets, producers have found innovative ways to stay in the black despite lackluster mailbox prices.

Our survey indicates approximately one-quarter of dairy producers have implemented alternative land or dairy add-on revenue streams. This shift is a testament to the agility and adaptability within the industry, as producers explore various avenues for profitability. Although there is considerable interest in these alternative revenue streams, most dairy operators do not have immediate plans to expand their businesses in this direction over the next three to five years.

A Popular Choice: Beef-on-Dairy

Not surprising, among the diverse strategies being employed, beef-on-dairy practices have emerged as a popular choice. With the U.S. beef cattle herd reaching its smallest size in 64 years thanks to persistent drought and strong cattle prices that discourage retaining heifers, dairy farmers are meeting the call to produce beef-on-dairy crossbreds to satisfy growing demand.

Nearly three-quarters of operators are engaged in at least one beef-on-dairy practice, with breeding and raising being the most prevalent methods. Despite a decline in the number of producers raising animals under their beef-on-dairy operations in the past year, there is an increase in the sale of branded beef products.

National Association of Animal Breeders reported beef-on-dairy semen sales grew by about 317,000 units in the U.S. in 2024. Phil Plourd, president of Ever.Ag Insights, highlighted the economic rationale behind these developments. He notes the $900 price for a day-old beef calf presents a much more reliable investment than the inherent risks and unpredictability associated with raising a dairy heifer. This is a significant consideration for producers, especially given the record-high dairy replacement prices observed in 2025.

Dale Woerner with Texas Tech shared at the Milk Business Conference he believes beef-on-dairy crossbreds have added immense value to the beef supply chain and should be seen as a long-term solution.

“Beef-on-dairy crossbreds have added enough value to the beef supply chain that we should never change what we’re doing. We should continue creating these crossbred cattle for the future,” he said.

Strategies for Success

The survey reveals the majority of producers selling beef-on-dairy calves do so within the first week of birth, with many also opting to raise them on-site. This approach allows producers to capitalize on early sales and effectively manage resources.

The dairy industry is witnessing a notable shift toward alternative revenue streams as producers seek stability and growth amid uncertain market conditions. By embracing innovative practices such as beef-on-dairy, agritourism, on-farm processing and carbon markets, they are not only ensuring their current economic well-being but are also setting the stage for sustainable future growth. As these practices gain traction, it will be interesting to observe their long-term impact on the overall dynamics of the dairy sector.

Through diversification and innovative strategies, producers are not just navigating present challenges but are also building a resilient and sustainable future for the industry.

A Future of Tech Synergy

Tue, 10 Jun 2025 13:00:00 GMT

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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Technology has woven itself into the fabric of various industries, and the dairy sector in particular stands as a beacon of how it can be harnessed to modernize operations. This transformation is not merely about enhancing productivity but also animal welfare and a more sustainable future for the industry.

“As an early believer in genomics, I followed technology. I graduated college, and I told myself, ‘We’ve got to follow technology. We’ve got to lead technology for the industry’. We drove right into it,” says Tim Rauen, GenoSource CEO and 2024 Milk Business Leader in Technology award recipient. Rauen’s commitment to adding technology into dairy farming has made GenoSource a leader in agricultural innovations.

Current Trends in Tech

Our survey revealed two-thirds of dairies now use at least one form of feeding technology, with health monitoring collars and ear tags being the most widespread. In fact, there has been a notable uptick in the use of health monitoring technology over the past year. However, the usage of automated calf feeders and rumen monitoring bolus has seen a decline compared to 2024.

Survey data shows a preference for collars and tags equipped with individual data tracking, software for monitoring health events and surveillance cameras. These tools are invaluable in herd health tech, with the majority of operators (83%) leveraging at least one form of technology primarily for monitoring and tracking the health of individual animals. While some areas, such as automated injection systems and youngstock monitoring, remain underutilized, there’s clear evidence of substantial adoption across other areas.

Only two-in-five operators are employing technology specifically aimed at monitoring milk production and quality. Data integration software that facilitates cross-system management is the leading tool, currently used by 27% of operators, with an additional 30% planning to implement it in the next three to five years. Despite this, there is a notably low interest in adopting real-time sensors and technologies designed to monitor udder health and detect mastitis.

As operators adopt and adapt to new technologies, the potential benefits to productivity, animal welfare and sustainability are boundless. With leaders like Tim Rauen at the helm of innovation, the future of dairy farming will be equipped to face the challenges of tomorrow with cutting-edge solutions.

Renewed Confidence: The Dairy Industry is Optimistic in 2025

Wed, 04 Jun 2025 15:26:51 GMT

Profitability and Growth: A Positive Outlook

This reflects a sense of optimism in regard to the industry’s future, spurred by innovative solutions and improved management tools. Greg Moes of MoDak Dairy in Goodwin, S.D., shared an interesting strategy at the Milk Business Conference.

“Beef-on-dairy carried us when the milk prices were low,” he says, highlighting a growing trend among larger operations. This strategy is just one example of how farmers are diversifying to weather financial challenges.

The industry’s renewed confidence is not unwarranted. It is driven by younger operators who are unafraid to embrace innovations, improved herd management and dive into other strategic solutions. These key indicators suggest dairy operators feel more optimistic about 2025 compared to the previous year. Not only are operators expecting improved profit margins, but a significant number are also contemplating scaling their operations. Specifically, 44% of surveyed producers intend to expand over the next five years, a testament to their belief in the industry’s trajectory.

Evolving Challenges and Solutions

What’s more heartening is the reduced producer concern about industry trends such as the pressure to lower environmental impact, scrutiny over animal welfare and increased consumer demand for sustainable practices. While these are still important considerations, the level of apprehension surrounding them seems to have decreased.

2025 appears to be a pivotal year for the dairy industry, with widespread optimism surrounding financial gains and strategic plans for expansion on the farm. As operators work to navigate the promising landscape ahead, their collective efforts will undoubtedly shape a resilient and thriving industry for years to come. Dairy operators and stakeholders alike should keep a close eye on these developments, as they signal a positive shift in the industry’s fortunes.