Profit Tips

How McCarty Family Farms Hedges Fuel Costs to Protect Dairy Margins

Fri, 08 May 2026 13:17:13 GMT

The great rebalancing of 2026 has taught dairy producers a vital lesson: You cannot control the wind, but you can certainly adjust your sails. While much of the industry’s focus remains on milk checks and component values, a silent predator often lurks in the shadows of the balance sheet — the fuel pump.

For an operation like McCarty Family Farms in Rexford, Kan., the 2025 Milk Business Leader in Technology Award winner, which milks thousands of cows across multiple states, the scale of production is matched only by the scale of its energy requirements. With feed trucks, tractors and skid steers running 24/7, fuel is not just a line item; it is the lifeblood of the operation. And in an era of global energy volatility, leaving that lifeblood to the whims of the spot market is a risk Ken McCarty, co-owner and manager, is unwilling to take.

The Math of the Spike

To understand the McCarty strategy, one must first understand the stakes. On a modern, large dairy, the equipment never stops. The sheer volume of TMR moved and the constant management of manure requires a fleet that consumes thousands of gallons of diesel every week.

For large herds, like McCarty’s, a 50¢ spike in diesel can derail a quarterly budget. In reality, that half-dollar move isn’t just an inconvenience; it represents a massive shift in capital that could have been reinvested in herd health, technology or labor. By locking in fuel prices, McCarty isn’t just buying diesel; he is buying the psychological and financial stability required to manage a complex organization.

The 18-Month Horizon: A Layered Approach

The McCarty strategy is defined by its proactivity. While many producers wait for a good day at the local co-op, McCarty and his team are looking 12 to 18 months into the future. They don’t view fuel procurement as a single transaction but rather as a continuous process of layering.

The process begins with a deep dive into data. Working closely with their fuel seller, they evaluate historical usage patterns. They don’t just look at what they used last year; they account for upcoming changes, whether that’s an expansion in acreage, a shift in equipment efficiency or a change in the beef-on-dairy program that might increase hauling requirements.

Once the known demand is established, the layering begins. As forward months become available on the market, the McCarty team begins to book physical gallons. The goal is to reach approximately 90% coverage by the start of the budget year on Jan. 1.

Mitigation, Not Speculation

Perhaps the most important takeaway for other producers is the McCarty philosophy on winning. In a world of high-frequency trading and market gurus, it is easy to fall into the trap of trying to time the bottom of the market. Ken McCarty is quick to dispel that notion.

“We have never viewed this as a money-making strategy,” he says. “Instead, it is purely a risk mitigation strategy.”

For McCarty, the goal isn’t to hit the absolute lowest price of the year — a feat that is more about luck than skill. Instead, the benchmark is historical consistency. If the farm can land in the bottom third or bottom half of the 5- to 10-year historical average or even just maintain consistency year-over-year, the strategy is a success. This consistent-cost model allows the farm to set its milk margins with confidence, knowing that this large input on the farm is already settled.

The Hidden Exposures

Even with 90% of their consumed fuel locked in, McCarty acknowledges the limits of the hedge. The farm remains exposed to indirect fuel costs — the market effects on purchased goods and, perhaps most significantly, milk freight increases.

This distinction is crucial for producers to understand. Locking in the diesel for your own tractors doesn’t protect you from the fuel surcharges applied by the third-party haulers moving your milk or the trucks delivering your distillers grains. This reality reinforces why being aggressive on the fuel you can control is so important; it narrows the window of vulnerability on the variables you cannot control.

Beyond the Contract: Efficiency as a Hedge

While forward contracting provides financial protection, McCarty is also focused on the physical side of the equation: consuming less. Every gallon of diesel not burned is a gallon that doesn’t need to be hedged.

The farm is constantly searching for ways to reduce its energy footprint. This includes everything from optimizing feed routes to reduce idling time to investing in newer, more fuel-efficient equipment. In this view, energy efficiency is the ultimate long-term hedge. It is a permanent reduction in exposure that pays dividends regardless of what happens in the energy markets.

“We have lived through times like this in the past and have no desire to repeat it, so ultimately, if we can be in the bottom third or bottom half of the 5- to 10-year historical average, or at least consistent year-over-year, then we are satisfied,” McCarty shares. “Of course, we are constantly searching for ways to consume less fuel and energy in general as an additional method of reducing our exposure to energy markets.”

Lessons for the 500-Cow Producer

While the McCarty scale is vast, the principles are entirely scalable for a modern 500-cow operation. Whether you are milking 40,000 or 500, the great rebalancing of the market means that margins are found in the details.

Compeer Financial ag economist Megan Roberts concurs with McCarty and says hedging isn’t about hitting the top or the bottom of the market; it’s about avoiding the economic risk of doing nothing.

“Risk management strategies, including hedging, are less about predicting the market and more about carefully managing exposure, using consistent, incremental decisions to smooth volatility in a way that fits the needs of your dairy operation,” she says. “Every farm is different, but in today’s environment, having a clear plan in place and following it with discipline is a wise strategy.”

In the end, the McCarty’s approach to fuel is a reflection of its approach to dairy farming as a whole: disciplined, data-driven and focused on the long game. By taking the volatility of the energy market off the table, it allows McCarty’s to focus on what truly drives the farm’s success: the health of the cows and the quality of the milk.

In a year where milk prices are shifting and trade policies are in flux, the lesson from McCarty Family Farms is clear: Protect what you can, manage what you must and never leave your margin to chance.

The Great Rebalancing: Why 2026 Milk Prices are Defying the Supply Tsunami

Fri, 01 May 2026 12:48:04 GMT

As the calendar turned to 2026, the U.S. dairy industry found itself standing at a complex crossroads. For producers, the view out the tractor cab window was one of cautious optimism, tempered by the sobering reality of a global market that was, quite literally, overflowing. The story of the 2026 dairy market is not one of a simple boom or bust, but rather a great rebalancing — a period defined by record-breaking production, a revolution in protein demand and the looming shadow of international trade negotiations.

The Tsunami of Milk

The entry into 2026 was defined by a singular, staggering fact: There was a lot of milk. The industry was coming off a 2025 campaign that saw U.S. production grow at a pace rarely seen in recent history. For the full year of 2025, production had climbed 2.8% over the previous year. However, it was the second half of 2025 that truly signaled the coming tidal wave, with production up nearly 4% compared to the same period in 2024.

For example, in Idaho, the state has seen consistent growth rates of 5% to 8% per month year-over-year for the last 18 months. For 2025, Idaho is projected to be up 7.5% in total milk production.

“That 7.5% is on a very big base,” explains Rick Naerebout, chief executive officer of the Idaho Dairymen’s Association. “It equates to roughly 3.5 million lb. of milk a day more this year than we had last year. We’ve definitely turned on the milk production.”

This isn’t just an American phenomenon. Europe, too, saw a 4% surge in the latter half of 2025. By the time the industry reached January 2026, the momentum was undeniable. Production was up 3.4% year-over-year, fueled by a national herd that had expanded by 189,000 head.

As the spring flush approached — that annual period where cows reach peak production — the sheer volume of milk began to test the physical limits of the supply chain. In California, the nation’s dairy powerhouse, the system began to buckle. Reports of milk being dumped due to capacity constraints sent a chill through the industry. It was a stark reminder that even when prices are stable, the physical reality of moving and processing millions of pounds of a perishable product remains the industry’s greatest logistical hurdle.

The Protein Pivot: Why Prices Held Firm

In any other era, a global oversupply of this magnitude would have sent prices into a tailspin. Yet, as Ben Laine, senior dairy analyst with Terrain noted in his report, the market took a sharp turn higher, sooner than many experts expected. The savior of the 2026 balance sheet was not a shortage of milk, but a fundamental shift in what the world wanted from that milk.

“Consumers want more protein. There has been a convergence of GLP-1s, new Dietary Guidelines and marketing dollars aimed at developing new products that have accelerated the demand shift. And high-protein dairy products are well-positioned to meet that need,” he says.

The industry has indeed witnessed a protein boom. Consumer demand for high-protein yogurts, ultra-filtered milks and milk protein concentrates reached a fever pitch. This demand fundamentally altered the value of the milk components. Whey, once considered a humble byproduct, became a market leader, benefiting from a steady, multimonth climb in value.

This protein pivot created a fascinating ripple effect. As more milk solids were pulled into the production of high-protein consumer goods, there was less surplus skim left to be dried into nonfat dry milk. This scarcity in the skim market provided a sudden, unexpected lift to nonfat dry milk prices. By early 2026, the market was optimistic that Class III and Class IV prices could be supported despite the heavy supply. However, this strength was uneven. While whey and protein-heavy products soared, cheese and butter remained stubbornly low compared to 2025 levels, creating a disjointed market that signaled volatility ahead.

“The support for milk prices right now is being driven by high whey and nonfat dry milk values as opposed to cheese and butter. Since that’s a reversal from the norm, the market might spook easily at any unexpected signals from the data over the next couple of months,” Laine adds.

The Export Lifeline and USMCA Shadow

While domestic protein demand provided the floor, it was the export market that provided the ceiling. In 2025, exports played a critical role in driving demand. U.S. dairy exports grew by 3.8% on a total solids basis, coming just shy of the record set in 2022. The total value of these exports reached a staggering $9.51 billion.

“Over the last two years, the majority of the new cheese made in the U.S. has gone into the global market as international demand surged. The international demand is also helping pull U.S. milk overseas,” says William Loux, senior vice president of global economic affairs at USDEC.

However, as the second quarter of 2026 began, the industry’s eyes turned toward the borders. The United States-Mexico-Canada Agreement (USMCA) was scheduled for a joint review in July. For the U.S. dairy farmer, the stakes could not be higher. More than 40% of the total value of U.S. dairy exports flows to our North American neighbors — $2.58 billion to Mexico and $1.31 billion to Canada.

Although, Loux doesn’t anticipate any disruption to trade with our dairy partners.

“2025 was unequivocally a successful year for exports. The U.S. continues to establish itself as an essential supplier to global consumers, helping meet the growing global demand for dairy products, in particular cheese, dairy proteins, and, surprisingly in 2025, butterfat,” Loux says. “Market access is vital to U.S. dairy exports. In order to continue supplying high-quality nutritious products to consumers around the world, the U.S. must continue to maintain and expand our trade agreements. Those agreements have not only proven to benefit U.S. dairy farmers and exporters but also have enhanced local supply and dairy product manufacturing in our partner markets.”

The Forecast: A Volatile Path to 2027

Looking at the numbers, Laine’s outlook for the remainder of 2026 suggests a more favorable environment than originally feared, but one that requires a steady hand on the wheel.

In Terrain’s most recent quarterly outlook, Laine forecast Class III milk prices to average $17.00/cwt, while Class IV is forecast to reach a robust $19.50/cwt. As we move into the second half of the year, the forecast remains resilient, with Class III averaging $16.75 and Class IV holding strong at $19.20.

However, the long-term horizon suggests a gradual cooling. By the first half of 2027, the forecast dips slightly to $16.60 for Class III and $17.80 for Class IV. These numbers reflect an industry that is successfully navigating a period of high supply but is also wary of the cracks appearing in the durability of the recent price moves.

“Markets continue to move and have surpassed those forecast levels, but with the risk of more volatility. I’d view that as an opportunity to take some risk off the table rather than banking on prices continuing to rise,” Laine says.

Strategy in the Face of Uncertainty

The lesson of early 2026 is clear: the market is rewarding those who are proactive. The jump in prices during the first quarter was not a guarantee of future riches, but rather a window of opportunity for risk management.

With volatility expected to ramp up as the spring flush peaks and trade negotiations intensify, the reliance on tools like Dairy Revenue Protection and other hedging strategies has never been more vital. The great rebalancing of 2026 means that while the outlook has improved, the margin for error has narrowed.

“Keep an eye on what consumers are looking for, both here and abroad, and work it into your marketing plan,” Laine says. “During major shifts like we’re seeing now, that might mean more active risk management, but it also means keeping an eye on where the demand for protein is showing up in revenue streams on the farm. At this point, that might not be protein prices on the milk check directly, but it could include ongoing opportunity for beef calf sales.”

Success in this environment isn’t just about producing more milk. It’s about understanding the global flow of protein, the geopolitical climate of North American trade and the discipline to take risk off the table when the market offers a favorable price. As the spring flush continues, the U.S. dairy farmer remains — as always — a resilient fixture in a world that is increasingly hungry for what they produce.

The Packer’s Dream: How Beef-on-Dairy is Solving the $2 Billion Consistency Problem

Wed, 22 Apr 2026 13:13:05 GMT

When Brad Kooima of KKV Trading spoke to “AgriTalk” in late January, he described beef-on-dairy as the “gorilla in the room.” But it wasn’t just the volume that caught his attention; it was the control.

“For the first time, you got an integrator that has the ability to control that thing from its birthday and schedule it out 341 days later that we’re going to slaughter that thing,” Kooima said. “Once a dream that the packers chased.”

That dream is now a reality, according to data presented at this year’s High Plains Dairy Conference. For decades, the beef industry has struggled with the fragmented nature of the native cow-calf sector — thousands of small herds with different genetics, different calving seasons and massive variability at the rail.

Ending the War on Variability

Lauren Kimble, manager of ProfitSOURCE Supply Chains for Select Sires, Inc., highlighted the greatest strength of the beef-on-dairy movement is its ability to kill variability.

“I care deeply about consistency ... variability is the enemy,” said Sidney Abbot of OT Feedyard & Research Center, a sentiment echoed throughout the conference.

The data proves why. While the total U.S. fed cattle harvest is a mixed bag of quality, program-specific beef-on-dairy is hitting 40% Prime and 59% Choice. Because these calves are born on dairies that operate like clockwork, they offer the packer something the native beef industry rarely can: Year-round market supply and uniform carcasses.

The Factory Floor of Beef

In the Texas High Plains, where over 25% of the nation’s fed cattle are processed, the shift is undeniable. Data from Laphe LaRoe of Smith Cattle Company shows while native cattle inventories are plummeting, the beef-on-dairy line is climbing.

By 2026, the dairy barn has effectively become the factory floor for the beef industry. Because a dairy cow calves every day of the year, the integrator (the dairy producer) can provide a steady, predictable stream of high-quality protein to the packer every single week. There is no calf crop season. There is only a continuous, scheduled flow.

This isn’t just a marginal gain; it is a fundamental shift in the dairy business model that allows for this factory-like precision. Ken McCarty of McCarty Family Dairy in Kansas says the transition from Holstein bull calves to high-value beef-on-dairy crosses has rewritten their balance sheet. McCarty Family Farms was recognized as the 2025 Milk Business Leader in Technology Award winner for transforming their operation into a high-tech, 20,000-cow operation driven by innovation, data and bold decision-making.

“Bull calf sales went from something that you basically ignored in your budget to something that really today accounts for, depending on the month in the market, somewhere around 50% of our overall revenue,” McCarty says.

When half of a dairy’s revenue is tied to the beef side of the barn, the producer is no longer just a milk man — they are a high-stakes beef integrator with every incentive to meet the packer’s demand for perfection.

Systems Capture Value

As Troy Marshall of the American Angus Association notes: “Genetics create potential. Systems capture value.”

The system is the ability to track a calf from its specific beef-sire breeding date through a standardized calf-raising program, into a professional feedyard, and onto a rail where it hits Certified Angus Beef (CAB) specs with surgical precision.

By 2026, the industry isn’t just selling cattle; it’s selling predictability. For the packer, a beef-on-dairy calf isn’t a gamble — it’s a scheduled delivery of a high-marbling, consistent product that meets the consumer’s demand every time. The gorilla in the room isn’t just big; it’s incredibly disciplined.

The Cost of the Squeeze: Inside the Strategic Shift Reshaping U.S. Dairy

Thu, 16 Apr 2026 14:04:13 GMT

As we pull the curtain back on the first quarter of 2026, the U.S. dairy industry is presenting a paradox that has even the most seasoned market analysts leaning in. On the surface, the numbers look familiar: the national milking herd is growing. But a closer look at milk check components reveals a surprising deceleration.

According to the National Milk Producers Federation (NMPF) Dairy Market Report released on March 30, 2026, “while the milking herd continues to grow, component growth surprisingly decelerated to start 2026, indicating that producers are responding to strong economic incentives from beef-on-dairy but not pushing for maximum milkfat tests with the fall in butter prices.”

This isn’t a fluke of biology; it’s a calculated business pivot. We are witnessing a strategic shift where producers are weighing the cost of the squeeze against the reality of the global market.

The Beef-on-Dairy Influence

The primary driver behind this deceleration is the sheer economic gravity of the beef-on-dairy market. In 2026, the incentive to produce a high-value crossbred calf has, in many cases, outpaced the incentive to push for that extra tenth of a point in milkfat.

Curtis Bosma with HighGround Dairy told “AgriTalk” host Chip Flory earlier this year that there are cows in the herd today that might not economically deserve a spot based on their milk production alone.

“But farmers are keeping them because they are pregnant with a black calf. It’s essentially a rebate that keeps the cow in the stall until that calf arrives,” Bosma says.

Producers are making a sophisticated management choice: If the butterfat market is softening, why invest in high-energy, higher-cost rations required to maintain record-breaking tests? Instead, they are diverting that management focus toward the black ink provided by the beef-cross side of the ledger. It is a vivid example of the margin revolution in action — producers aren’t just chasing production; they are chasing the most efficient path to profitability.

The Not-So-Burdensome Supply

Normally, a growing herd combined with heavy milk production would be a recipe for a market glut and burdensome inventories. Yet, as we move through early 2026, the warehouses aren’t overflowing. While component production remains at record highs, the market feels tight because surging domestic protein demand and robust butterfat exports are rapidly absorbing what is still a historically large volume of milk.

This has created a unique support system for key dairy products:

Nonfat Dry Milk (NFDM): Despite U.S. milk production rising 3.4% in January, NFDM production continued to slide. Extraordinary demand for high-protein products — such as Greek yogurt, cottage cheese, and ultrafiltered milk — is pulling protein away from the dryers. This limited supply is supporting a price rally, though analysts warn U.S. prices are now sharply higher than other major exporters. A convergence in global prices may be necessary to maintain long-term export momentum.
Butter: Even as milkfat tests failed to grow at a normal pace, butter production jumped 6% in January. However, inventories have noticeably tightened (12% lower than January 2025), helping prices rally. Strong export orders have balanced the market, with January exports nearly tripling prior-year levels as buyers prebook deliveries well into 2026.

The Genetic Floor

Despite the current deceleration in components, the long-term potential of the American herd remains at an all-time high. Corey Geiger, lead economist at CoBank, points out 61% of the gain in butterfat over the current era is tied directly to genetics.

“The dairy cow is the most researched animal on Earth,” Geiger shared at the IDFA Dairy Forum earlier this year. “We have more tools in the toolbox to change butterfat levels than ever before, and those genetic gains are permanent.”

The story of early 2026 is one of agility. The industry is proving it can grow its footprint without crashing its own price floor. By responding to the beef-on-dairy incentive and pulling back on expensive nutritional pushes when the market doesn’t reward them, U.S. producers are demonstrating a level of market maturity unseen in previous decades.

The most valuable pound of milk isn’t always the one with the most fat — it’s the one that fits the current economic roadmap.

The Genetic Pivot: How 2026 Wellness Traits are Redefining Dairy Profitability

Fri, 10 Apr 2026 17:10:29 GMT

For decades, the perfect cow was defined by a single metric: the bulk tank. If she produced a mountain of milk, she stayed in the herd. But as the dairy industry enters 2026, the definition of success has undergone a radical transformation. Today’s producers are operating in a world where feed costs, heat stress, carbon footprints and supply chain demands are just as critical to the balance sheet as total pounds of milk.

To meet this complexity, genetic selection has evolved from a simple production index into a high-precision roadmap for survival. The recent 2026 updates to Zoetis’ Clarifide Plus and the Dairy Wellness Profit Index (DWP$) represent more than just incremental data points; they represent a strategic shift toward bulletproofing the dairy cow for a more volatile future.

The New Math of the $100 Gain

The core of the 2026 update is an economically weighted index designed to balance income drivers against expense drivers. In the current market, a genetic index must do more than predict output; it must predict the cost of that output.

According to Zoetis data, achieving a $100 increase in the DWP$ 2026 index translates into measurable lifetime profit across five critical pillars:

$61 in quality production — Modernizing the focus on components and volume.
$19 in antibiotic stewardship — Selecting for cows that naturally resist disease, reducing the need for intervention.
$8 in animal welfare — Prioritizing longevity and physical soundness.
$6 in fertility — Ensuring the cow stays on cycle and in the herd.
$6 in precision nutrition — Maximizing the conversion of feed to milk.

“The 2026 updates provide dairy producers with additional precision in breeding for cows that are profitable, efficient and sustainable,” says Nick Randle, senior marketing manager for U.S. dairy productivity and milk quality at Zoetis. The goal is to move away from blanket management and toward more precise animal care informed by predictive insights.

Breeding for a Warming World: Heat Resilience

One of the most significant additions to the 2026 toolkit is the introduction of DWP$ Heat. For decades, producers in the South and West have relied on mechanical cooling — fans, misters and cross-vent barns — to mitigate the devastating effects of the Temperature Humidity Index (THI). However, management alone has its limits.

Zoetis has introduced two new traits to tackle this biologically:

Fertility Heat Resilience (Z_FR) — This trait predicts the change in the probability of a first-service conception rate as THI increases.
Milk Heat Resilience (Z_MR) — This predicts the stability of daily milk production as the heat rises.

By incorporating these traits, producers can breed a herd that maintains its “cool” during the 20% of the year when heat stress typically ravages the bottom line. It’s a recognition that resilience and profitability are now inextricably linked.

The Feed Efficiency Frontier: Z_RFI and RUMiN

Feed remains the single largest expense on any dairy, often accounting for 65% of the total budget. Historically, selecting for feed efficiency was difficult because it was hard to measure on individual cows in a commercial setting.

The inclusion of Zoetis Residual Feed Intake (Z_RFI) changes that. This trait measures the dry matter intake that cannot be accounted for by milk production or body weight. In simpler terms: It identifies the cows that eat less than expected without sacrificing a single pound of milk. In validation analyses, the top 25% of animals ranked by Z_RFI consumed 2.2 lb. less dry matter per day than their peers. Across a 20,000-cow herd, that 2.2-lb. difference represents a staggering shift in the feed bill.

Simultaneously, the RUMiN trait predicts the genetic potential for enteric methane production. While methane was once seen only as an environmental metric, it is increasingly becoming a market-access requirement.

The Supply Chain Connection: The Danone Factor

The revolution in genetics is not just happening on the farm; it’s being driven by the processor. In 2024, Zoetis and Danone formed a strategic partnership to advance sustainable production. For a global giant like Danone, which has committed to cutting methane emissions by 30% by 2030, the genetic makeup of their suppliers’ herds is a critical lever.

“Genomic testing of our farmers’ herds plays an important role in our global methane reduction strategy,” says Anco van Schaik, global director of procurement at Danone. By selecting for the Milk Methane Intensity (Z_MI) trait, producers can demonstrate to their buyers that they are producing lower-carbon milk at scale. This isn’t just about being green; it’s about ensuring that a farm remains a preferred supplier in a carbon-conscious marketplace.

The graph shows a projection of the improvement in methane intensity in one of Danone’s dairy herds year over year based on its DWP$ genetic progress.

(Zoetis)

Proof of Concept: McCarty Family Farms

The theoretical value of these genetic updates is best illustrated by real-world results. At McCarty Family Farms in Rexford, Kan., the 2025 Milk Business Leader in Technology award winner the pursuit of genetic optimization has fueled a massive operational expansion.

In 2011, the McCartys milked 7,000 cows with an average daily production of 70 lb. per cow. Today, they milk nearly 20,000 cows, and their productivity has soared to over 100 lb. per cow daily.

“You can’t manage what you can’t measure,” Ken McCarty says. “We’ve increased productivity by almost 50%.”

But the growth wasn’t just in volume. By leveraging genomic insights like DWP$, the McCartys have driven their somatic cell count down to a range of 120,000 to 180,000 — a hallmark of superior animal welfare and milk quality.

For the McCartys, the focus on specific indexes like TPI and DWP$ with Clarifide Plus is the engine behind their mating and breeding strategies. It allows them to select for a cow that isn’t just a milk machine but rather a sustainable asset that fits their specific environmental and economic goals.

The End of the Average Cow

The 2026 update to Clarifide Plus and DWP$ marks the end of the era of the average cow. In a world of tight margins and high scrutiny, there is no longer room for animals that don’t pull their weight in efficiency, health and resilience.

By combining wellness, performance and sustainability into a single, profit-driven index, the industry is moving toward a more individualized form of animal care. As Brett Bristol, head of precision animal health at Zoetis, notes, the goal is to empower producers to “advance both environmental stewardship and overall herd profitability within a single, comprehensive index.”

For the modern dairy producer, the message is clear: The most valuable tool in the barn isn’t just the parlor or the feed wagon; it’s the DNA of the heifer standing in the hutch.

Beyond the Black Hide: Why Your Beef-on-Dairy Strategy Could Be Costing You $66,000 a Year

Mon, 06 Apr 2026 12:13:56 GMT

For the past several years, the beef-on-dairy revolution has been the single most transformative trend in the dairy industry. What started as a strategy to manage excess heifer inventory has evolved into a sophisticated, multi-billion-dollar supply chain. Although the conversation has shifted, as the novelty has worn off, the boom phase is maturing and a new, more disciplined chapter is beginning.

Moderated by Joe Dalton of the University of Idaho, a panel of industry leaders recently sat down to map out the next chapter in 2026 at the High Plains Dairy Conference in Amarillo, Texas. The message was clear: In the coming year, simply producing a black-hided calf will no longer be enough. Success in 2026 will be defined by genetic verification, supply chain partnerships and a relentless focus on carcass consistency.

The Powerhouse of the High Plains

To understand the scale of this shift, one must look at the geography of the American feedyard. Laphe LaRoe, director of operations for Smith Cattle Company and Chair of the Texas Cattle Feeders Association provided a sobering look at Cattle Feeding Country.

The region encompassing Texas, Oklahoma and New Mexico accounts for more than 25% of the nation’s fed cattle, generating a staggering $22 billion in total economic impact. However, the traditional supply of native beef cattle is under pressure. U.S. cattle inventories have seen a decline of 8.5 million head between 2019 and 2026.

“We are doing more with less,” LaRoe noted, pointing to charts that show beef production holding steady despite plummeting cattle numbers. The gap is being filled by beef-on-dairy. In the Texas High Plains, the inventory of native steers and heifers is trending downward, while the beef-on-dairy line on the graph is climbing aggressively. By the first quarter of 2026, BxD calves are no longer a byproduct — they are a primary component of the feedyard inventory.

The Scarcity Premium Versus Price Dispersion

Lauren Kimble, manager of ProfitSOURCE Supply Chains for Select Sires, Inc., highlighted the current market dynamics. Currently, the industry is enjoying a scarcity supply premium. Because total cattle numbers are so low, almost all cattle are commanding high prices, and the quality spreads — the price difference between a mediocre calf and an elite one — have condensed.

However, Kimble warned this window is closing. As we move through 2026, the outlook points toward increased supply and, more importantly, price dispersion.

“Genetic differentiation may be the key to maintaining optimal market access,” Kimble explained. In a market with more volume, buyers will become more selective. The scarcity premium will be replaced by a quality premium, where calves with verified genetics and known performance will pull away from the mixed genetics pack.

What Beef-on-Dairy Gets Right

The reason the BxD movement has been so successful is rooted in its ability to solve the beef industry’s greatest challenge: variability. Kimble shared data illustrating beef-on-dairy gets it right in three major areas:

Quality and Grade: BxD calves are hitting higher Choice and Prime percentages with strong marbling expression.
Consistency: Unlike the native cow-calf sector, which is fragmented across thousands of small herds, dairy operations provide uniform carcasses, tighter yield/quality distribution and a year-round market supply.
Efficiency: These calves are bred for growth performance that fits the modern packer’s needs.

The data is startling. While the total fed cattle harvest averages roughly 12% Prime and 73% Choice, program-specific beef-on-dairy is hitting 40% Prime and 59% Choice. As Sidney Abbot of OT Feedyard & Research Center famously stated: “I care deeply about consistency … variability is the enemy.”

The Financial Reality: Genetics as Brand Equity

Delbert Hollis, president and founder of CMS Livestock Auction, brought the livestock trading perspective to the stage, and he didn’t mince words about the financial implications of genetic selection.

In an analysis of video sales from January 2025 to February 2026, the price differences were stark. Calves out of Holstein dams vs. non-Holstein dams saw a $26.17/cwt advantage. Angus sires held a $14.27/cwt lead over Limousin and Simmental crosses. Even the NHTC (non-hormone treated cattle) designation added a $10.28/cwt premium.

Another compelling data point was the program advantage. Calves sold under a verified genetic program averaged $1,966.37 per head (standardized to 450 lb.). Calves with no genetic program averaged $1,913.40.

That is a difference of $52.97 per head.

“For a load of 105 head sold, that difference equals $5,562,” Hollis noted. “If you are selling 105 head every month, that is $66,744 left on the table every year by not using tailored program genetics.”

In 2026, genetics are no longer just an expense — they are brand equity.

Hitting a Moving Target

As the industry matures, the targets are moving. Jon D. Robison of JDR Livestock Management Services and Dale Woerner of Texas Tech emphasized the industry is evolving its conversation around red meat yield (RMY).

“We have a system that doesn’t tell us accurately what we should be producing,” Woerner noted, referring to the USDA Yield Grade system introduced in 1965. The next chapter of beef-on-dairy will involve managing hot carcass weight (HCW) and ribeye distribution to hit specific Certified Angus Beef (CAB) specs more accurately.

The mantra for 2026, as quoted by Troy Marshall of the American Angus Association, is: “Genetics create potential. Systems capture value.”

The Next Chapter

The High Plains Dairy Conference panel made it clear the next chapter of beef-on-dairy is about professionalization. The days of “any black bull will do” are over. To thrive in 2026, producers must:

Verify Genetics: Use programs that provide data-backed premiums.
Focus on the Dam: Recognize the Holstein/Jersey base is just as important as the beef sire.
Build Relationships: Partner with feedyards and packers who value consistency over volume.
Capture the Data: Understand the tuition of the past decade has taught us that variability is the most expensive mistake a dairy can make.

As the industry moves forward, beef-on-dairy is no longer just a boom. It is the backbone of a new, more efficient and more profitable American beef supply chain.

The Strategic Blueprint for Dairy Expansion: Engineering Resilience in a Volatile Market

Fri, 03 Apr 2026 12:53:06 GMT

In the dairy industry, a period of low milk prices often creates a sharp paradox. While many producers retreat into defensive postures, the “top one-third” of operators — those with a clear vision and a robust balance sheet — often view these downturns as a strategic buy low window. However, transitioning from a stable operation to an expanded one during a market trough is not a matter of intuition; it is a rigorous exercise in financial engineering and operational discipline.

To successfully navigate this transition, producers must look beyond the herd and into the mechanics of their financial engine. By synthesizing the insights of financial industry veterans like Gary Siporski and lending experts like Jim Moriarty, vice president of animal ag lending - dairy for Compeer Financial, we can map out the essential blueprint for growth in the modern dairy economy.

1. The Strategic Audit: “Buy Low” Opportunity Versus High-Risk Gamble

The distinction between a calculated expansion and a reckless gamble lies in the pre-existing health of the farm’s financial ecosystem. Before a shovel hits the dirt, a loan committee looks for a foundation of trust with current suppliers. An operation that is not current with its local vendors is rarely a candidate for institutional growth.

According to Siporski, the primary indicator of readiness is the equity position. Entering an expansion, a top-tier operation should ideally sit at 70% equity. The critical analysis, however, is the pro-forma or post-expansion reality. If the debt required to grow pulls the total equity below 45%, the operation may be over-leveraging its safety net.

Moriarty adds a layer of practical flexibility to this, noting while 50% to 60% equity is a strong starting point, the mission-critical goal is maintaining at least 45% owner equity after the new facilities, cows and equipment are added.

“Dairy farms can be successful at as low as 40% owner equity,” Moriarty explains. “But the operation needs to be performing at a high level when leverage gets in that range.”

The goal is to invest while milk prices are low to be positioned for the rebound, but only if the farm can absorb the stubbornly high overhead of modern expansion.

Moriarty also offers a sobering counter-narrative to the traditional buy low strategy. Unlike previous cycles, today’s low milk prices have not translated into lower costs for construction, equipment or cattle. External economic factors — inflation and supply chain constraints — mean that while the milk check is smaller, the cost of concrete and steel remains at a premium. This creates a unique challenge: the opportunity for well-managed operations to invest during a downturn is still there, but the entry price for that growth is historically high.

2. The Efficiency Mandate: Getting Better Before Getting Bigger

Growth without efficiency is a liability. In a business context, getting better is defined by a specific set of key performance indicators (KPIs) that prove the management team can handle increased complexity.

The financial discipline begins with a monthly cash flow projection completed every December, reconciled against an accrual adjusted income statement at year-end. Operationally, the farm must demonstrate elite-level management across several pillars:

Quality & Health: A somatic cell count (SCC) <100,000, heifer survivability at 95% and a cull cow rate <30%.
Cost Control: An operating expense rate of <80% and a cost of production (COP) ideally under $17/cwt.
Human Capital: Low labor turnover is a hallmark of a stable business.

Moriarty emphasizes expansion is not a cure for existing inefficiencies.

“While new facilities can provide efficiencies, expanding is not a cure for cost of production challenges. If a farm’s cost of production is above [industry averages], it suggests that dialing in on areas of improvement in the existing operation should be the area of focus,” he warns.

High-performing operations today are showing COPs in the $15 to $17/cwt range. Exceeding this suggests dialing in existing performance should be the priority before adding more cows to the system.

3. Capital Structure and the Liquidity Oxygen

Expansion requires a long-term commitment, often referred to as being “in it for the long pull.” Success depends on matching the life of the asset with the term of the debt while maintaining enough liquidity to survive a black swan market event.

Structuring the Debt

Long-Term Debt: Real estate and major infrastructure should be structured on a 15-to-25-year amortization. Securing and locking in the lowest possible interest rates is a defensive necessity.
Intermediate Debt: Cattle and machinery should be amortized over 5 to 7 years, ensuring debt is retired before the asset’s peak utility is exhausted.

The Liquidity Buffer

Perhaps the most vital component is the unadvanced Line of Credit (LOC). A top-tier producer ensures a $500/cow LOC remains available at all times. Moriarty points out a strong working capital position — often exceeding $1,000 per mature cow — provides the necessary cushion for the cash flow disruptions that inevitably occur during an expansion.

Loan structuring tools can further protect liquidity, such as:

Interest-only periods: 12 to 18 months during construction.
Revolving herd loans: Often called borrowing base loans, these require only interest payments as long as the herd value remains within parameters, allowing principal pay-downs during high-price cycles.

4. The Lender’s Perspective: Green Flags in a Down Market

When a loan committee reviews an expansion application, they are looking for proof of concept. In the current economic climate, lenders prioritize several key benchmarks:

Profitability History: Lenders look for net income levels of $800 to $1,200 per cow annually over the last 3 to 4 years.
Capital Costs: Moriarty emphasizes the “financial danger zone” when evaluating capital costs (depreciation, interest and leases).

“Capital costs may increase to $3.25 or even $3.50/cwt for a several-year period but will hopefully be offset by labor and production efficiencies. If capital cost per cwt. gets to $4.00 per cwt or over, the stress on cash flow and profitability can be a significant challenge,” he says.
Transparency: Quality and timeliness of financial information are paramount. Producers who provide up-to-date balance sheets and comprehensive pro-forma budgets receive faster feedback and more favorable terms.

5. Risk Management and the Professional Network

For the modern dairy, expansion is no longer a solo endeavor. It requires a professionalized board of advisers, including financial consultants to stress-test pro-formas and commodity brokers to manage volatility.

Moriarty advocates for a layered approach to risk management to diversify coverage:

Layer 1 (DMC): Dairy Margin Coverage should be the foundation for the first 6 million lb. of production.
Layer 2 (DRP): Dairy Revenue Protection provides a floor price by quarter while leaving upside potential open.
Layer 3 (Options): Spread positions can offer a higher price floor at a lower cost, though they require more active management.
The Beef Component: With higher beef values today, Livestock Risk Protection (LRP) on beef calf sales is a sound strategy to protect this growing secondary income stream.

Farms do not need to cover 100% of their milk, but a combination covering 50% to 75% of production balances the cost of premiums with the necessity of protecting the expanded debt load.

The Vision of the Top-Third Producer

Expansion in a down market is a hallmark of a visionary producer, but that vision must be validated by cold, hard metrics. By maintaining strong equity, keeping a competitive COP and prioritizing better over bigger, a dairy operation transforms from a family farm into a resilient agricultural enterprise.

As the industry evolves, the successful top-third producers will be those who don’t just see the cows, but the entire financial engine that sustains them. They understand while the milk price is out of their control, their equity position, their cost of production and their risk management strategy are firmly in their hands.

The Infinite Business Model: Strategic Ownership and the Future of Dairy Expansion

Wed, 25 Mar 2026 13:03:09 GMT

In the high-stakes world of dairy expansion, the most critical decision a producer makes isn’t which parlor to build or which cows to buy; it’s how they structure the business for the next 50 years.

During a recent panel at the Milk Business Conference, Greg Bethard of High Plains Ponderosa Dairy, TJ Tuls of Tuls Dairy and Hank Hafliger of Cedar Ridge Dairy shared a candid look at the infinite business model and why they are choosing strategic partnerships over private equity.

Partners Versus Investors

As dairies grow in scale, the need for capital often brings outside investors to the table. However, Greg Bethard is wary of the traditional private-equity model. For Bethard, the dairy business is a multigenerational marathon, while private equity is often a sprint toward a five-year exit.

“Our model has been taking on partners as we grow to provide capital, but we’ve elected not to go with private equity,” he explains. “Private equity typically wants to get out in five to seven years. We use an infinite business model; we want to be here in 40 or 50 years. We are looking for partners, not investors.”

This philosophy ensures every stakeholder is aligned with the long-term health of the operation rather than short-term dividends. By seeking out partners who already have successful track records in agribusiness, these producers ensure their backers understand the inherent volatility and biological timelines of the dairy industry.

The Tuition of Failure

Success in the dairy industry is rarely a straight line. Each panelist noted their most valuable insights came from expensive, “hard-knock” lessons — what Tuls’ father famously called “tuition.”

Tuls recalls a pivotal moment as a young manager in Wisconsin when he neglected to closely monitor a new separator building. Four years later, the oversight resulted in a $600,000 refit bill.

“My dad just looked at me and said, ‘That’s the tuition I’m going to have to pay for you. We won’t make that mistake again,’” he says.

Bethard shares a similar sentiment regarding the steep learning curve of expansion. After “getting his tail kicked” during his first expansion in 2018, he realized that persistence is the only way through the struggle. He points to the importance of time spent in the trenches to achieve operational mastery.

“We have our 10,000 hours of experience now,” Bethard says, referencing the mastery concept popularized by Malcolm Gladwell. “We’re going to screw stuff up. There are going to be bad days. There’s going to be stuff that doesn’t work right. But we just keep going at it, and we’ll get it figured out.”

Strategic Location: The New Map

If these producers were to build a brand-new dairy in the next five to 10 years, their criteria for where that would be has fundamentally changed. The days of building a dairy and waiting for a processor to knock on the door are over.

“You have to have a contract before you can even build now,” Bethard notes. Beyond the milk market, his checklist for a new location is focused on risk mitigation: “I’d choose a place with low environmental risk and a place without a lot of people.”

Tuls’ answer is even more direct: “Close to a milk plant.” As transportation costs and regional milk marketing orders become more complex, the proximity to processing is the ultimate hedge against logistics volatility.

The Next Generation

For Hafliger, the infinite nature of the business is personified by his family. With 16 grandchildren, some of whom are already starting to count cows, the focus is on creating a viable structure they can inherit.

Hafliger’s best strategic move was moving to Idaho and partnering with his son and sons-in-law to run three dairies as a single, unified unit.

“By running them as one, we don’t have that ‘my dairy is doing better than yours’ conflict,” Hafliger says. “It’s about maturity, learning to relax and let things happen rather than trying to force them. That makes the business much more rewarding.”

The infinite business model isn’t just about milk production; it’s about the endurance of the ag-entrepreneur. By avoiding the short-term pressures of private equity, embracing the costly “tuition” of their mistakes and strategically positioning themselves near processing hubs, these producers are ensuring that their operations are built to last for the next half-century.

Lock in Gains: How LRP Can Help Protect Beef-on-Dairy Profits

Wed, 18 Mar 2026 19:20:23 GMT

Record-high beef-on-dairy prices have reshaped the balance sheet for dairy farmers, turning a once-small revenue source into a major part of the bottom line. But without protection, those gains could disappear just as fast, underscoring how quickly momentum can shift in today’s cattle markets.

Experts caution today’s opportunity demands a more deliberate approach.

Mike North, president of the producer division at Ever.Ag, and Will Babler, principal at Atten Babler Risk Management LLC, made two points clear during the Professional Dairy Producers conference:

Beef-on-dairy is now a significant part of a dairy’s financial picture.
Tools like Livestock Risk Protection, or LRP, are critical to protecting those profits, especially at today’s historic highs.

Beef-on-Dairy Income Becomes a Major Revenue Stream

In just a few years, beef-on-dairy revenue has expanded dramatically. Strong demand from feedyards and packers, combined with tight U.S. cattle supplies, has pushed prices for beef-on-dairy calves to levels few producers expected even five years ago. For many farms, those calf checks now add several dollars per hundredweight to the milk check equivalent.

“At the end of 2022, the average dairy was getting paid about a $1 to a $1.50 a hundred in beef revenue,” North says. “Today, that number is north of $5. We’ve tripled that part of the financials. It’s a massive, massive opportunity, and with it a massive growing potential risk.”

Babler described beef as a new pillar supporting dairy profitability.

“We now have this other leg to the stool, whether it be black calves or cull cows,” Babler says. “That also has become a major contributor to our revenue stream.”

But as beef revenue grows, so does exposure to market swings. North and Babler say this makes it a smart time for producers to think about expanding their risk management toolbox . Alongside programs like DMC and DRP for milk, tools such as LRP can help protect beef-on-dairy income, letting producers capture strong markets while buffering against sudden drops.

Are Beef-on-Dairy Calves the New $24 Milk?

For many dairy producers, beef-on-dairy calves have become one of the most valuable animals leaving the farm. Day-old calves have averaged $1,500 in some regions and pushed over $2,000 in others — a price that would have been hard to imagine just a few years ago. North says the current market feels similar to $24 milk.

“What should one do with $24 milk?” he asks. “Walk quietly into the sunset and say, ‘We’ll wait to see if it gets better?’”

With prices sitting at all‑time highs, he says this isn’t the moment to step back.

“We’re talking about all-time records, and you just don’t walk away from those and say, ‘Ah, I’ll check back in next month.’ That’s not how we approach markets like this. You’ve got to go after it,” he says.

Lock in Gains

As attractive as today’s beef-on-dairy calf prices are, North cautions markets at record highs rarely stay there forever. When you’re standing at the top of the mountain, the fall can be just as steep on the way down. That’s why he encourages producers to think carefully about risk management tools like LRP to help guard against sudden market swings.

The federally subsidized insurance program administered by USDA allows producers to establish a price floor while still participating in market rallies, functioning similarly to a put option. Unlike futures contracts, which require fixed contract sizes, LRP policies can be written to cover the actual number of animals in a group rather than standardized futures contract weights.

Babler notes how attractive the program has become in the current market.

“When we look at the tools available, LRP really stands out for cross calves right now,” he says. “There’s a lot of reach in the market, and premiums have collapsed. We’re talking about $30 a head floors.”

Babler explains if prices fall below the level you insured, LRP pays an indemnity equal to that gap. Because the program uses national price indexes rather than individual sale prices, it protects against broad market declines, not differences from one sale barn to another.

Recent changes to the program have also helped increase interest among dairy producers. New coverage options now exist for cull cows and unborn calves, including beef-on-dairy crosses that may be sold shortly after birth.

Subsidy levels have also increased significantly, rising from about 13% in earlier versions of the program to roughly 35% to 55%, depending on the level of coverage selected. Premium payments are now due at the end of the coverage period rather than upfront, which improves cash-flow timing for producers.

These changes have also helped to improve the program’s flexibility. Babler says cattle can now be sold up to 60 days prior to the coverage end date without affecting the policy, compared to the previous 30-day window. Producers may also purchase coverage for animals they have under a valid purchase agreement, as long as possession occurs at least 90 days before coverage ends.

Taken together, those updates have reduced out-of-pocket costs and made LRP more accessible as a risk management tool.

Playing Offense with LRP

North and Babler emphasize LRP isn’t just a defensive strategy. It’s also a way for producers to play offense, capturing opportunities when markets are strong.

“Risk management really has two sides,” Babler says. “You play offense when markets give you opportunities, like we’re seeing in cattle right now, and you lock in the gains. At the same time, you play defense to protect yourself from the downside when things turn. In the past, dairy producers mostly dealt with corn and milk, which often moved in opposite directions. But now there are more markets to work with — milk products, protein, and beef — so there’s a better chance that at least one of them is working in your favor. The goal is to capture those strong markets while still protecting yourself when prices drop.”

While prices are expected to remain strong for now, Babler and North emphasize risk management tools provide a safety net, letting producers play offense when opportunities arise, while still playing defense to protect the gains they’ve worked hard to earn.

From Handshakes to High-Speed Data: The New Reality of Dairy Lending

Mon, 09 Mar 2026 12:26:51 GMT

For decades, the relationship between a dairy farmer and a lender was often built on a firm handshake and a look at last year’s tax returns. But in the modern dairy landscape, the handshake has been replaced by a high-speed data transfer.

To the uninitiated, the mountain of spreadsheets, herd monitoring reports and feed inventories required for a loan might feel like a bureaucratic hurdle. To Ashley Vande Zande, senior credit officer for Compeer Financial, and Gary Sipiorski, an independent dairy financial consultant, that data is something much more powerful: It is a story.

Painting the Picture

“Detailed data helps paint a picture of your farming operation,” Vande Zande says.

When a loan moves from a farmer’s kitchen table to a lender’s desk, it travels through a gauntlet of departments from origination to underwriting to final funding. In those back offices, the people making decisions haven’t walked your pens or seen your new parlor.

The data acts as their eyes. Accurate, complete and detailed records allow a lender to develop financial trends. These trends aren’t just numbers; they are an analysis of the borrower’s balance sheet and earnings that identify hidden strengths and calculate true borrowing power.

Without the data, the picture is a blur; with it, the lender can see exactly where the operation stands today and, more importantly, where it can go.

The Cow-Side Connection

One might wonder why a credit officer cares about herd monitoring records or cow flow. For Vande Zande, these metrics are the leading indicators of financial success.

“Submitting herd monitoring or feed information allows us to drill down into the operation’s herd health and production,” she explains.

Consider a farmer who invests in improved cow comfort or a more precise ration. The immediate result is a spike in milk production. In the eyes of a data-savvy lender, that spike isn’t just a win for the cows; it’s a forecasting tool. Improved production trends suggest higher future revenue, which leads to better efficiency ratios. This historical data cements past performance and allows the lender to structure a loan that suits the operation’s specific repayment ability.

Furthermore, these records turn “invisible” assets into collateral. Detailed machinery listings and inventory spreadsheets provide a clear understanding of the assets available to secure a loan, giving the farmer more leverage and the lender more confidence.

The Consultant’s Checklist

Sipiorski, who has spent decades navigating the bridge between the barn and the bank, views data as the ultimate tool for financial soundness.

“Financial data are the only way a lender can determine a farm’s profitability,” Sipiorski says. “As long as a farm wants to borrow money, lenders will demand data.”

Sipiorski notes that while technology like RFID tags and computer outputs are great for management, the lender is looking for four financial pillars:

Solvency — Can the farm survive a market hit?
Liquidity — Can the farm pay its bills on Tuesday?
Profitability — Is there actual net income after the dust settles?
Repayment ability — Can the operation cover principal and interest without breaking?

Lenders may evaluate as many as 25 different items, ranging from debt per cow to the increasingly vital metric of debt per hundredweight (cwt) of milk. These numbers ensure that a loan is a ladder, not a weight. As Sipiorski bluntly puts it: “No lender wants to set up a farm to fail.”

The Partnership Model

At the heart of this data obsession is a shift in the philosophy of ag lending. For lenders like Compeer Financial, the goal isn’t just to be a source of capital but rather a partner in the operation’s future.

“We really want to partner with our clients, so they understand every aspect of their finances,” Vande Zande says. “We’re here to help crunch the data so they know where they stand today and where they can go in the future.”

By sharing data, the adversarial nature of the bank-client relationship disappears. Instead of a farmer asking for money and a banker looking for reasons to say no, the two parties work together to establish specific steps to work toward long-term goals. The data allows the lender to understand the industry factors, both positive and negative, that have affected the operation, allowing them to build a loan structure that survives the volatility of the dairy market.

The Bottom Line

Combing through data and financial planning can be an overwhelming part of running a dairy, but it is the only way to move from surviving to thriving. In today’s modern era, the most successful dairy farmers aren’t just experts at cow comfort or crop yields; they are masters of their own farm information.

When you hand over your data, you aren’t just fulfilling a requirement; you are giving your lender the tools they need to help you win.

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Dairy's 2026 Safety Net: Producers are Moving from DMC to DRP

Tue, 24 Feb 2026 14:56:55 GMT

In the high-stakes world of dairy production, the margin between a profitable versus a catastrophic year is often measured in pennies. For decades, the industry relied on a relatively simple equation: the price of milk minus the price of feed. In 2026, that equation is more complex. The tools that once served as a reliable safety net are now facing a paradox – a reality where the data says producers are thriving, but the checkbook says otherwise.

To understand the future of dairy survival, the two pillars of the federal safety net must be dissected: Dairy Margin Coverage (DMC) and Dairy Revenue Protection (DRP). While one is a legacy program struggling to adapt to a world of hidden costs, the other is a flexible, high-tech shield that is rapidly becoming the industry standard.

The Dairy Margin Coverage Era: A Foundation in Flux

The Dairy Margin Coverage program, created by the 2018 farm bill, was designed to be the ultimate insulator against market shocks. Through various iterations from the 2014 farm bill’s Margin Protection Program for Dairy (MPP-Dairy) to the current DMC program, the program has been a statistical success. For most producers, the math is compelling: An average premium of 15 cents per cwt yields an average payment of $1 per cwt.

The structure for DMC, which is administered by the Farm Service Agency (FSA), is simple. Tier 1 offers a “safe harbor” for the first 5 million pounds of production, allowing for coverage up to $9.50 per cwt. Tier 2 allows larger operations to cover their excess production at a lower $8 cap and higher premiums.

However, the “success” of the DMC has hit a wall and is increasingly becoming a thing of the past. The formula relies on four main ingredients: the National All-Milk Price, corn, soybean meal and premium alfalfa. When these crop prices are low, the “calculated” margin looks healthy.

This is where the paradox lies.

“When crop prices are this low, it makes the milk margin under the DMC program look really high on paper, which is why the program didn’t trigger payments at any coverage level between May 2024 and November 2025,” says Danny Munch with the American Farm Bureau Federation.

The December 2025 pricing data finally points to the first payments in more than a year, but only for producers covered at the highest available $9.50 margin (at a $9.42 per cwt margin), he adds.

According to Katie Burgess with Ever.Ag, the DMC program uses national numbers for both the milk price and feed costs, so it has never really reflected the reality of any individual dairy operation.

“For the sake of keeping it simple and straight forward, I believe [the DMC program] does a fine job of representing a margin over feed. Of course, it’s not capturing the non-milk or feed data, so it’s not accounting for the higher non-feed costs the past few years. It’s also not making any adjustments for higher cull cow and calf revenue either,” she says. “For a producer really looking to dial in their margins, it’s not perfect. But, for a producer looking for some basic coverage against falling milk prices or rising feed costs, it does the trick – especially when you consider it comes at an affordable premium cost of 15 cents per hundredweight for the $9.50-margin Tier 1 coverage.”

The “Hidden Cost” Crisis

The primary criticism of the current DMC is its simplicity. Grant Grinstead with Vir-Clar Farms in Wis., says the DMC formula doesn’t account for modern cost factors.

“There are so many other cost factors that come into play now versus just feed,” he says. “I think we’re still missing some of that for true risk protection ... it makes us look like we’re doing better than we are.”

“The additives, minerals and fuel costs — those costs play a role,” Munch adds.

Beyond inputs, there is the massive, uncounted elephant in the room: labor. In fact, since 2016, the cost of keeping a reliable team on the ground has surged by 30% to 50%, driven by a tightening rural workforce and rising cost of living. This especially holds true for farms in states that have mandated overtime laws for dairy employees.

As dairy operations scale, labor has moved from a minor line item to one of the largest expenses on the balance sheet. Because DMC only looks at feed, a producer can be losing money on every gallon of milk due to labor and fuel, yet USDA data will show they are operating in a “healthy” margin.

Industry leaders are now “ringing the bell” for a formula enhancement. Suggestions include a “floor” for feed costs to protect those who grow their own crops or the inclusion of a “total cost of production” index that accounts for the reality of additives, minerals and human capital.

The Rise of Dairy Revenue Protection

As the DMC program struggles with its rigid formula, producers are shifting to a more surgical tool: DRP. Launched by the USDA Risk Management Agency in 2018, the program covered nearly 30% of all U.S. milk production in 2025.

Unlike the DMC, which focuses on the margin, DRP is designed to insure against unexpected declines in quarterly revenue. It is a “fluid” policy — markets change daily, and the coverage can be adjusted to match. For the lifetime of the program through 2025, net indemnities to producers have totaled more than $850 million, proving its effectiveness in a volatile market. Through the first three quarters in 2025, the program paid out a net of $31 million, but according to Phil Plourd, president of Ever.Ag, that number will go up considerably once Q4 figures land, estimated at an additional $150 million.

Ken McCarty, co-owner of McCarty Family Farms in Rexford, Kan., says that in their experience DMC is less applicable to a farm of their size compared to DRP.

“We believe that it is important that all safety net programs are kept nimble enough to adjust to changing market dynamics and the evolution of the dairy industry,” he says.

Grinstead views risk management as a way to provide control points for the business, ensuring the farm survives the future. Since 2019, Grinstead has utilized DRP as a net-positive tool for Vir-Clar Farms, managing his strategy at least a year in advance to secure incremental margins. After experiencing a significant premium loss during the COVID-19 pandemic, he shifted to combining DRP with options to protect his financial downside while still participating in potential market rallies.

“We’re not looking for home runs,” he shares. “We’re looking for base hits and just kind of driving our business through some control points and being here for the next generation tomorrow.”

5 Pillars of the Dairy Revenue Protection Strategy

For producers, DRP offers five advantages DMC cannot match:

1. Class vs. Component Pricing. DRP allows producers to choose how their milk is valued. Class pricing (Class III and IV) is ideal for those focused on fluid volume. However, for the rising number of Jersey and high-component herds, component pricing is a game-changer. It allows producers to establish an insured price based on butterfat, protein and other solids.

2. Flexible Coverage Levels. Producers aren’t locked into a “one-size-fits-all” tier. They can cover up to 100% of their expected production at levels between 80% and 95%. This allows a producer to “buy what they need” based on their specific break-even points.

3. State-Level Indexing. DRP is not a national average; it is indexed to the state or region where the producer is located. This accounts for regional basis and production fluctuations, making the indemnity much more accurate to the producer’s actual loss.

4. Natural Market Protection. DRP is a pure market tool. It covers revenue loss caused by natural occurrences in market prices and yields. While it doesn’t cover the death of cattle or management errors, it provides a “floor” that allows a producer to keep doing business even when the global market turns sour.

5. The 2026 Evolution. The program is not stagnant. For the 2026 crop year, several key revisions are being implemented to protect the integrity of the program and the producer. This includes a new “Insured’s Certification Against Subsidy Capture,” ensuring the program remains a legitimate insurance tool rather than a speculative one. Most importantly for herd health, the 2026 revisions include language that considers animal disease a “natural disaster” event that can trigger coverage if it prevents a producer from marketing milk.

“We continue to see strong interest in DRP insurance, as it helps protect against falling milk prices regardless of what feed prices do,” Burgess shares. “It’s especially useful for producers with output of more than 6 million pounds annually who can’t fully cover their production with the DMC program.”

Even if a producer can cover all their milk with DMC, it is also a good idea to have a DRP policy because many times DRP allows them to lock in a higher milk price than what would be protected by DMC, she adds.

“For instance, in 2025, many DRP policies saw sizable claim payouts whereas DMC only had an 8 cent payout in December,” Burgess notes. “Both DMC and DRP are useful programs, but knowing the strengths and weaknesses of each is important to make sure you are using the right tool for the job.”

The sign-up period for the 2026 DMC is still open, but time is quickly running out. Producers have until Feb. 26 to lock in coverage, and current market conditions suggest payments can be expected throughout 2026.

Why the U.S. Milking Herd is Growing Despite Record-Low Replacement Numbers

Thu, 19 Feb 2026 15:09:47 GMT

The traditional “manual” for running a dairy farm is being rewritten in real-time. For decades, the math was straightforward: cull underperforming cows, raise as many replacement heifers as possible, and focus almost exclusively on fluid milk volume. Today, that equation has been upended by a historic surge in the beef market and a genomic revolution that is fundamentally changing the biological output of the American herd.

According to Abbi Prins, a livestock analysis from CoBank’s knowledge exchange division, the industry is currently navigating a structural shift where the value of a cow is no longer tied solely to her milk production, but to her role as a surrogate for the high-value beef market. This beef-on-dairy movement is redefining heifer inventories, culling strategies and the very composition of the milk hitting the processing plants.

The Heifer Inventory Paradox

The current state of the U.S. heifer inventory is a primary point of concern for the industry. Historically, a tight heifer supply would signal an impending contraction in milk production. However, the U.S. milking herd remains robust, sitting at over 9.5 million head — the largest in over 30 years.

According to Prins, the reason for this paradox isn’t just producers holding onto older cows; it is a calculated shift in how they view their elite genetics.

“The beef-on-dairy movement has played a huge role in where total inventories stand,” Prins explains. “Dairy producers have found that when it comes down to profitability, they are breeding their elite animals for replacements and everything else to beef. You get a better price for that animal selling it as a beef-cross than you do making an extra replacement heifer that you might not need.”

This strategy has rewritten the traditional culling manual. In the past, if a cow wasn’t covering her feed costs or was underperforming in the parlor, she was sent to the back door. Today, the black calf in her uterus — often worth upward of $1,400 — acts as a high-value insurance policy.

“The equation is not as conducive to culling anymore because of where the beef market stands,” Prins says. “The value of that beef-on-dairy calf is worth more than just selling that cow off to be culled. It’s the reason we’re keeping cows longer.”

Holstein Cows Who Milk Like Jerseys

While the herd is skewing older, it is also becoming remarkably more efficient in terms of components. Prins notes a sentiment shared by International Dairy Foods Association CEO Michael Dykes: modern Holsteins are starting to milk like Jerseys.

“The shift in genomics to be able to produce more components is a big deal,” Prins says. “We are seeing record butterfat and protein levels. Even though the milk price is strained, producers are adding $3 to $4 a hundredweight to the bottom line because of these beef-on-dairy calves and high component values.”

Prins dismissed concerns that keeping older cows longer would result in a loss of genetic potential for the national herd. Because producers are being much more surgical with their breeding — using gender-sorted semen on only their top-tier animals — the next generation of replacements is genetically superior to anything the industry has seen before. The older cows are simply serving as surrogates for the terminal beef market, fulfilling a dual purpose that keeps the farm’s balance sheet afloat.

Weathering the 2026 Storm

As Prins looks toward the next six to 12 months, her forecast is one of “sadly optimistic” realism. She anticipates a slow, strategic pullback in the national herd size rather than a massive move.

“If we send too many cows to the back door at once, we create other issues,” she warns. “I’m hoping for a slow trickle down in cow numbers over the next six months, which should hopefully help the milk price rebound as we move out of this oversupply situation.”

Regarding the beef market, Prins is keeping a close eye on USDA’s cattle reports. While a rebuilding of the beef herd is inevitable, she believes the dairy-beef market has at least two more years of strength.

“Even if we start rebuilding the beef herd, we have to keep extra heifers on the cow-calf ranch, which further contracts the immediate beef supply. With strong consumer demand, that beef-on-dairy price should stay buoyant for the next couple of years,” she says.

The Bullish Bottom Line

When asked if the dairy industry is on the verge of a recession, Prins remains cautious. She points out traditional metrics, like how much Dairy Margin Coverage (DMC) is paying, don’t account for cull cow revenue, calf sales or labor costs, and therefore don’t tell the whole story.

“If you look at milk income over feed cost, it looks tough,” Prins admits. “But if you add beef-on-dairy into the equation, we’re not looking so bad.”

For Prins, the path to long-term gains requires enduring some short-term pains. She remains bullish on the industry’s future, citing massive investments in dairy processing and the stability of feed costs — barring any catastrophic weather events.

“Agriculture is cyclical. The highs eventually end, and the lows eventually come back up,” she concludes. “Between the processing investment and the beef-on-dairy market, there are a lot of things to be bullish about. The dairy industry is in a good position to rebound without turning the table.”

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Idaho’s $4 Billion Dairy Boom: Why the Gem State is Defying West Coast Trends

Tue, 03 Feb 2026 14:05:50 GMT

While milk production across the West Coast faces a period of contraction, Idaho is carving out a different narrative. With USDA reporting the state’s production value near $4 billion in 2024, Idaho has transitioned from a regional player into a global dairy powerhouse. According to Rick Naerebout, chief executive officer of the Idaho Dairymen’s Association, this surge isn’t accidental. It is the result of a unique confluence of business-friendly policy, aggressive vertical integration and a fundamental shift in how dairy cattle are valued.

A Surge on a Massive Base

The sheer scale of Idaho’s recent growth is impressive. Naerebout reports the state has seen consistent growth rates of 5% to 8% per month year-over-year for the last 15 months. For 2025, Idaho is projected to be up 7.5% in total milk production.

“That 7.5% is on a very big base,” Naerebout explains. “It equates to roughly 3.5 million pounds of milk a day more this year than we had last year. We’ve definitely turned on the milk production.”

This growth has been facilitated by two primary catalysts. First, Idaho’s dairy producers are entering the current economic downturn with exceptionally healthy balance sheets following strong financial performances in 2024 and early 2025. Second, and perhaps most importantly, regional processors have finally lifted base restrictions that limited producers to fractional growth for years. With those caps removed, the Idaho dairy industry has surged to meet the available capacity.

The Magic Valley: The Heart of the Industry

The epicenter of this expansion remains the Magic Valley. While growth is visible across the state, approximately 75% of Idaho’s dairy industry is concentrated in this region. The concentration allows for an infrastructure of scale that is difficult to replicate elsewhere.

Idaho’s operations are notably larger than the national average, boasting nearly 2,500 cows per dairy. This scale, combined with a business-friendly climate — including the absence of agricultural overtime pay — allows Idaho producers to maintain lower costs than their neighbors in California or Washington.

Components and the “Black Calf” Phenomenon

Interestingly, the growth isn’t just coming from more cows; it’s coming from “better” milk. According to Naerebout, while volume is up 7.5%, the increase in milk components means the actual yield for processors is closer to 9%. This allows plants to produce more cheese, butter and powder for every pound of milk delivered.

Producers in Idaho, like other states, are also shifting culling practices.

“We’re hanging onto cows because they’ve got a black calf in them, and that calf is worth roughly $1,500,” Naerebout says.

The beef-on-dairy trend has become ubiquitous in Idaho, with adoption rates significantly higher than the national average of 70%. For many Idaho producers, the day-old calf has become a high-value commodity that provides immediate cash flow with minimal risk, as many are partnered with large feedlot operators, like Simplot, or feedlots to take the animals immediately.

Resilience Through Risk Management

The dairy industry is notoriously volatile, yet Idaho has shown remarkable resilience. Over the last 30 years, the state has only seen negative growth twice: in 2009 and 2013. Naerebout attributes this to a sophisticated approach to business that sets Idaho producers apart.

“Our dairymen are very savvy businessmen,” he notes. “We have a higher-than-average use of hedging tools. They insulate themselves from market downturns by making sure they are hedged.”

This financial discipline, coupled with being well-capitalized, allows these large-scale operations to weather economic storms that might shutter smaller farms in other regions.

The Shift to Vertical Integration

Perhaps the most significant structural change in Idaho’s dairy landscape is the move toward vertical integration. Unlike the traditional cooperative structure involving hundreds of members, Idaho has seen the rise of “processor-producers.”

Facilities like Idaho Milk Products and High Desert Milk were founded by small groups of dairy families — sometimes fewer than six — who pooled their capital to build their own processing plants. While Naerebout describes the startup phase of these ventures as “absolute hell” where families nearly lost everything, those who survived are now capturing the margins that previously went to third-party processors.

“They are capturing more margin for their business and using it as a form of risk mitigation,” Naerebout says.

This evolution from simple milk producers to sophisticated industrial processors represents the future of the Idaho dairy model.

Looking Ahead

As the industry faces a tightening economic window, Idaho’s producers remain focused on the long term. The goal for many is not just survival, but the creation of viable, multi-generational businesses. By combining aggressive adoption of technology, sophisticated risk management, and a willingness to invest in the processing side of the value chain, Idaho is proving that even in a mature industry, there is still significant room for a “growth state” to thrive.

“Idaho has been, and will likely remain, a growth area for plants and processors alike,” says Phil Plourd, president of Ever.Ag Insights. “It’s a hospital environment where all the stakeholders seem aligned around growing the industry.”

With strong components, high-value beef-on-dairy calves and a business environment that rewards scale, Idaho is well-positioned to remain the cornerstone of Western dairy production for the foreseeable future.

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The New Dairy Math: Why Beef and Components are Redefining the Milk Check

Fri, 23 Jan 2026 21:57:23 GMT

For decades, the financial health of a dairy farm lived and died by the milk check. But as 2026 unfolds, a radical shift in revenue streams is changing how the nation’s most modern dairies stay in the black. According to Curtis Bosma of HighGround Dairy, the industry is currently navigating a “perfect storm” of heavy supply, surging protein demand and a beef market that has turned a former by-product into a primary pillar of profit.

The “Beef Rebate”

Historically, beef accounted for roughly 5% of a dairy’s total revenue, a minor by-product of keeping a herd in milk. Today, that number has skyrocketed to 20% or even 25%. With day-old beef-cross calves fetching as much as $1,200, the “beef stream” is now the primary margin-maker for many operations.

“There are cows in the herd today that might not economically deserve a spot based on their milk production alone,” Bosma tells “AgriTalk” Host Chip Flory. “But farmers are keeping them because they are pregnant with a black calf. It’s essentially a rebate that keeps the cow in the stall until that calf arrives.”

A Surge in Components, Not Just Volume

While the headline milk production numbers are up, showing a massive 4.5% year-over-year growth as of November, the real story is in the composition of that milk.

More Than $11 Billion in Investment: New, state-of-the-art processing plants are coming online, and they aren’t just looking for water; they want solids. Gregg Doud, president and CEO with National Milk Producers Federation says: “There’s nothing like it in the history of U.S. agriculture, of any commodity, anywhere in the world.”
The Component Gain: Farmers are breeding and feeding for higher fat and protein levels. When you factor in these component gains, the actual “food value” reaching the market is outpacing the growth in raw liquid volume. Butterfat levels have set new records for four consecutive years, with an average of 4.23% nationwide in 2024, and protein content reaching 3.29% based on Federal Milk Marketing Order data. The downfall of high milk fat is that it has come at the cost of milk protein. According to CoBank, butterfat percentages in U.S. milk have been increasing at twice the pace of protein, which has been challenging to cheesemakers.

The Geography of Growth: South Dakota’s Rise

Bosma highlights South Dakota as a primary engine of this expansion. Lured by a business-friendly environment, lower environmental hurdles and cheaper feed, families from less friendly states (such as California) are relocating to the Plains.

The “GLP-1" and Whole Milk Effect

On the demand side, dairy is finding new life in unexpected places:

The GLP-1 Trend: As more Americans use weight-loss drugs like Ozempic, their focus has shifted to “intake efficiency.” They are seeking high-quality proteins to maintain muscle mass, and dairy, specifically whey and high-protein derivatives, is the “cleanest” protein available.
Whole Milk in Schools: The return of whole milk to school lunch programs is being hailed as a brand win. While it might not move the needle on total volume immediately, it plants the seed for lifelong dairy consumers by offering a product that actually tastes good.

Navigating $15 Milk
With Class III futures hovering around the $15 mark, the pressure is on. Bosma points out that the efficient operators are surviving by tapping into non-milk revenue: beef, carbon credits from methane digesters and solar energy.

“If you can tap into those additional sources, you might not feel a cash flow crunch until milk hits $12,” Bosma says. “But for those relying solely on the milk check, $15 is a very tough place to be.”

Listen to the entire conversation online .

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The Dairy Dilemma: Will High Beef Prices Offer a Lifeline or an Exit Ramp?

Thu, 15 Jan 2026 14:10:19 GMT

The dairy industry finds itself at a critical crossroads. With cheese hovering around $1.35 per pound and Class III milk barely topping $14 per hundredweight, the familiar “low prices cure low prices” cycle is in full swing, typically signaling a wave of supply liquidation.

“Typically, that means some liquidation on the supply side,” says Phil Plourd, president of Ever.Ag Insights. “But the beef situation makes things really interesting. Will high beef prices make producers stay (keep the quasi cow-calf thing going) or will they make them go (use high cattle prices to pave the exit ramp)? There’s no way to know for sure.”

The Rise of Beef-on-Dairy
For dairy operations like McCarty Family Farms Named 2025 Leader in Technology Award Winner , beef-on-dairy isn’t just a trend; it’s a five-year strategic cornerstone. The McCarty family is optimistic, projecting that strong beef herd trends, heifer retention rates and rancher retirements will maintain robust prices through 2026 and well into 2027.

“Of course, there is nothing certain in the ag economy, and black swan events seem to be occurring more often,” Ken McCarty says. “We are optimistic that [beef] values will remain strong for the foreseeable future.”

For them, beef-on-dairy has become a substantial, reliable non-milk income stream, bolstering profitability and, crucially, enhancing the long-term productivity of their farms through intensified genetic selection. They see “no tremendous downside risk in the beef-on-dairy market anytime soon.”

This growing confidence in beef-on-dairy isn’t anecdotal; it’s rooted in significant advancements. Patrick Linnel, director of market research for CattleFax, highlights in a recent Purina Report how smarter breeding decisions and genetic progress are transforming the landscape.

“Genetic suppliers have zeroed in on beef sires that are well suited for dairy cows,” Linnel explains, “and producers are making more targeted selections. The result? Stronger, more consistent cattle in which feedlots and packers are increasingly confident.”

While a small discount compared to native beef cattle might persist in some weight classes, its impact is far less dramatic, often offset by the reliability and superior feedlot performance of these crossbred animals.

Challenges and Opportunities
Despite this emerging lifeline, the dairy sector continues to face existential pressures. Corey Gillins, chief milk marketing officer for Dairy Farmers of America (DFA), reveals that their member survey from over a year ago anticipated a shrinking number of member farms. Then they projected the number of member-owner farms by 2030 to be 5,100. Gillins says they now believe the number will be lower than that. Although he says DFA’s data reveals a striking paradox: While the number of member farms is steadily declining, overall milk production remains robust, even increasing. This is also seen by other processors across the U.S.

“We’re losing dairy farms, but we’re not losing cows or milk,” he says, noting this consolidation often sees cows from exiting farms absorbed by other DFA members in the region, which is enabled by increasing processing capacity in growth areas such as Idaho, southwest Kansas, Michigan and New York. Gillins says they are even seeing milk production growth in areas such as southern Georgia and northern Florida.

Gillins agrees the beef-on-dairy revolution is a major factor mitigating the pain of low milk prices. DFA estimates 70% of dairy farmers are now engaged in beef-on-dairy, adding a significant $2.50 to $3.00 per cwt to their bottom line. Gillins also notes rising component values are adding another $1 to $3 per cwt to milk checks that are showing up even in Holstein herds that are now achieving high protein and butterfat levels.

From a different viewpoint, Gillins says for farms without succession plans, strong calf and cull prices offer a timely opportunity to exit the industry without incurring losses from prolonged milk prices.

“Some producers might think this is a good time for them to exit, rather than have some break even or negative cash flow months and wait for this price to come back around,” he says. “They don’t want to go backwards financially and will take advantage of the strong beef market to exit now.”

Yet, for others dairy producers, these additional revenue sources, combined with robust risk management tools like Dairy Revenue Protection and Livestock Revenue Protection (which can lock in beef calf and cull cow prices at significant levels), provide financial resilience to weather the current storm. As Gillins points out, producers who leveraged these tools in late 2025 were able to lock in favorable prices for 2026, setting themselves up for a profitable year despite the current milk price situation.

Embracing Change for Future Success
As dairy producers continue to navigate this complex financial landscape, the beef-on-dairy revolution stands as a testament to agricultural adaptability. While low milk prices continue to drive consolidation and farm exits, the strategic integration of beef genetics offers a tangible lifeline for many, transforming what was once a byproduct into a vital profit center. Gillins concludes that the industry’s future profitability is now a complex equation, far beyond the simple Class III milk price.

The long-term implications are still unfolding, but one thing is clear: The future of dairy profitability won’t solely be defined by the milk check. Instead, it will be shaped by producers’ willingness to innovate, diversify and strategically leverage every asset on their farm, ensuring resilience in an ever-changing market.

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The Changing Financial Tides of Dairy Farming: A New Year’s Reflection

The Changing Financial Tides of Dairy Farming: A New Year’s Reflection

Tue, 06 Jan 2026 13:13:53 GMT

It wasn’t that long ago that we considered ourselves fortunate to receive $35 for a Jersey bull calf and $150 for a crossbred. Times have certainly shifted since then. As the one keeping the books on our farm, I decided to remove the bull calf line item from our records four years ago, dismissing it as mere pocket change. But last year, with the earnings from these calves surpassing six digits, I realized it needed to make a comeback. And now, we’re grateful for the appealing price tags attached to those bull calves, as I’m sure many of you are too.

My late father had a tradition of keeping a little pocketbook where he documented his daily activities, both the highlights and challenges, whether personal or dairy related. He even tracked the Class III milk price, which used to hover around $15. One thing to keep in mind is my father’s dairy herd was sold off with the 2005 CWT program.

Navigating Declining Milk Prices with Strategic Diversification
Opening December’s milk check was a far cry from stellar. A lot can change within a year. What seemed an okay milk price last year now calls for some strategic maneuvering with our checkbook. Thankfully, the beef-on-dairy calves continue to generate income, offering some relief against the declining milk prices. Adding in the cull cow checks doesn’t completely fix the low milk price issue, but it does prompt the thought: What would we do without this beef-on-dairy profit source in our balance sheet? Dairy financial consultant Gary Sipiorski says beef income is adding $3 to $5 per cwt for many dairies. The truth is beef-on-dairy isn’t merely a side hustle any longer; it’s about integrating a robust beef enterprise directly into the dairy’s genetic and management strategy, fundamentally altering the balance sheet and the very definition of farm profitability. This added revenue stream has been a saving grace for many dairy producers this past year.

Now, with the increasing reliance on diverse income streams, the planning horizon broadens, and the skill set required also expands. It demands a keener eye on beef markets, genetic selection for dual-purpose traits and a more complex understanding of overall farm cash flow. This evolution challenges traditional mindsets, pushing producers to think more like diversified agricultural entrepreneurs rather than solely milk producers, a necessary adaptation for survival in a volatile market.

Adapting to Volatility
As we step into the New Year, communication is going to be crucial with all partners that gather around the table. While we generally like to plan a year ahead, we might now need to reassess and project just a month or two at a time until we see some light with the milk checks. Sipiorski also mentions both land and cattle prices are on the rise. His advice was clear: “Be careful when you think that we now have more collateral to borrow from. But, borrowing may become part of the strategy, depending on how long this situation lasts.”

In these rapidly changing times, adaptability and sound planning are more important than ever as we navigate the financial ebbs and flows of the dairy industry. Here’s to a year of resilience and strategic growth in farming.

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Dairy Profit Surge: Beef-on-Dairy Drives Revenue and Resilience in 2025-26

Mon, 29 Dec 2025 13:17:48 GMT

The beef-on-dairy trend is set to continue as a significant profit driver for dairy farms into 2026.

This practice, involving breeding a portion of the lower-end dairy herd genetics with beef sires, has substantially increased calf values, with day-old beef-on-dairy calves fetching significant prices due to a constrained U.S. beef supply. The combined income from cull cow and cross calf sales has seen a notable rise, contributing significantly to overall farm revenue and offering a valuable strategy for dairy producers to enhance profitability and manage risk in a fluctuating market.

In 2025, the beef-on-dairy stories for U.S. dairy producers that most resonated centered on the substantial increase in calf values and the significant contribution these sales made to overall farm revenue, offering a robust new profit stream and enhancing financial resilience amid market fluctuations.

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Beef-on-Dairy Silver Linings in the Current Margin Equation

Fri, 07 Nov 2025 14:30:03 GMT

The landscape for dairy farmers has experienced significant shifts recently. With favorable margins in 2024, the tunes in 2025 have changed dramatically. Dwayne Faber, a dairy farmer in Washington State, recently shared insights on “AgriTalk” about the challenges and opportunities currently facing the industry.

“I think margins were good for most people last year,” he says. “This year, things are tightening up again. We’re seeing milk price drop, particularly the Class IV markets have really softened.”

This downturn is causing concern for dairy farmers who must now navigate through this challenging period.

High input costs are similarly impacting farmers, putting pressure on the entire supply chain. Faber notes that being somewhat isolated, based on their location in the Pacific Northwest, their basis costs for importing corn from the Dakotas are substantially high. Across the board, expenses such as machinery, parts and labor have surged, mirroring the challenges faced elsewhere in the nation. Compared to beef prices, the discrepancy in costs is stark, illustrating the uphill battle that the agriculture sector is enduring.

“I mean, the input cost that farmers, ranchers, everybody’s facing has just been incredible,” he shares.

A lifesaving silver lining in the margin equation is the growing importance of the calf market within dairy operations. Faber says he is receiving $1,500 for a day-old Holstein Charlois cross calf, which is adding notable value per hundredweight to farm operations.

“For a lot of farms, it’s adding $2 to $3 per hundredweight to their to their operation,” he says. “I mean that’s a savior through this downturn.”

Huge Coupon Sitting Inside the Cow
This boom in beef calf revenue has provided a lifeline for many dairy farmers amid milk side downturns. With U.S. dairy cow numbers ballooning to a record 9.5 million, yet with low levels of dairy heifer replacements, farmers are milking every opportunity out of their herds. Cows that were once considered for slaughter due to low profitability now carry valuable calves, prompting farmers to optimize their asset cycles instead of simply offloading them.

“If a guy has a cow that’s not super profitable, but she’s got a $1,500 beef calf in her, you’re just going to keep milking her and dry her off and calve her out again and bring her back around, whereas historically, those low margin dairy cows end up going for butcher,” he says. “But now there’s this huge coupon sitting inside this dairy cow. And so, we’re just flooding the country with milk, and we’ve got too many cows with record low levels of dairy replacement heifers.”

This scenario that the U.S. dairy industry is witnessing in 2025 is reducing the number of cull cows heading to slaughter. The number of dairy cull cows has been low, reaching a 15-year low in June 2024, due to factors such as high prices and this continued beef-on-dairy phenomenon.

“I don’t know what changes that we’ll see, but the dairy cow value is significantly tied to the beef price,” Faber says.

Despite the much-needed boost this has provided in revenue generation, there is still a blanket of uncertainty that looms over future prices and market shifts.

Dan Basse, president of AgResources Company shared on the live taping of “U.S. Farm Report” at World Dairy Expo that milk prices are lower than a year ago because we have more cow numbers and the productivity per cow is rising.

“So that give us more volume, and we haven’t had the butterfat market that we needed, and the butter has kind of dropped,” he says. “So, putting it all together, when the dairy farmer sees a profit, he expands his herd. It’s a cycle that we’ve seen many times, and unfortunately, that’s where we’re at. So, we’re making money on the wet bull calves that are coming out. It’s much harder to make money on milk unless you’re sizable.”

As dairy farmers navigate these tumultuous times, they must continue to adapt, optimize and explore new avenues of revenue to maintain their livelihoods. It is a period of trial and transformation where the resilient will find ways to thrive amid adversity.

To listen to the full episode of “AgriTalk” with Dwayne Faber go to: AgriTalk-10-29-25-Farmer Forum - AgriTalk - Omny.fm

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Unlocking the Potential of Dairy Heifers: Strategies for Growth and Production

Mon, 03 Nov 2025 13:03:52 GMT

Dairy heifers are an asset selling at over $3,000 as the number of heifers available is limiting. Beef-on-dairy calves have reduced the number of heifers on farms as beef-on-dairy calves are selling at over $1,000 at two weeks of age. When pregnant heifers are ready to enter the milking herds, these opportunities can be considered improving your heifer program on your farm.

Opportunity 1
Average daily gain of your heifers is important. Most dairy managers know the daily milk yield of the herd and rolling herd average. Average daily gain for Holstein heifers should be 1.6 lb. to 1.8 lb. per day (1.4 lb. to 1.6 lb. for Jersey heifers). Average dairy gain before 12 months of age can be 1.8 lb. to 2.0 lb. per day for Holstein leading to protein gain and growth in stature. After 12 months of age, the gain might be lower at 1.5 lb. to 1.7 lb. with more fat compared to protein deposition.

Opportunity 2
Heifer size and age are key for milk production in first lactation milk yield. Heifers should calve in at 85% of mature milk cow body weight of the herd at 23 months of age. If your heifers are 24 months or older at calving, explore why this is occurring. If the heifer breeding program using hormonal protocol is not correct or effective, this can lead to delayed pregnancy. Are heifers not at optimal weight? Are you breeding based on age or size? Research indicates heifers over 24 months of age produce less milk and can experience udder edema. If heifers grew more than 2" during the first lactation, the heifer rearing program was not adequate. If heifers are not grown to optimize size, these heifers will divert nutrients away from milk yield to growth.

Opportunity 3
Close-up heifers are not the same as close-up older cows. Close-up heifers need the additional nutrients that older cows do not require. The challenges for heifers are the nutrient requirement to gain 1.5 lb. for continued growth, mammary gland development, calf development in the uterus and colostrum production. If the close-up pen contains both pregnant heifers and older cows, heifers can be short of nutrients or older cows can gain more weight. This same challenge occurs in the 60-day dry program (one group of dry cows leads to similar problems). The solution is separate dry and close-up heifer groups to allow tailoring nutrients needs and dry-matter intake reducing competition with older cows. Researchers report heifers do not experience lower blood calcium and do not need anionic salts or phosphorous binders in close-up rations saving 60¢ to 90¢ a day in the close-up heifer diet.

Opportunity 4
A separate heifer group after calving for fresh cows allows less competitive heifers to consume the optimal dry-matter intake. Because heifers are smaller and less dominant, dry-matter intake will be lower for these heifers when grouped with older cows. The eating pattern is also different compared to older cows (rate of dry-matter intake per minute, meal size and meal frequency). Heifer fresh cow pens should be under 90% capacity to minimize competition at the feeding bunk and beds to lie down. The ration should contain higher nutrient levels compared to older cows due to lower matter intake and continued growth to mature size.

Take home message
Heifers have unique requirements and challenges leading to individual groups, adjustments in feed additives and rations designed to meet growth and milk needs. Heifers are replacement animals allowing optimal culling. If managed correctly, heifers can express their genetic superiority and experience less metabolic challenges.

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Insightful Strategies to Help You Navigate the Financial Tides

Thu, 30 Oct 2025 16:25:51 GMT

Dairying is becoming increasingly complex, as fluctuating market conditions and rising operational costs put pressure on producers to stay profitable. Gary Siporski, an independent dairy financial consultant, emphasizes the importance of knowing your breakeven point — a foundational step for any successful dairy operation.

Back in 2016, the average cost of production in Midwest herds was $16.50. However, by 2023, inflation has driven that figure up to $20.25.

“Feed is a big rolling factor when in most dairies it is 30% to 50% of the cost of operation,” Sipiorski says.

Influential Factors on Dairy Profitability
Every dairy operation receives a basis over their Class III or Class IV prices, typically ranging from $1 to $5, depending on the milk plant. As we move into 2024, real numbers from coast to coast reveal the production cost for 100 lb. of milk has surged past $22 for some producers.

“That is all costs, including depreciation and heifer buying or raising costs,” he says.

A critical question arises: How low milk prices can feasibly drop? With a Class III price of $16, adding a $5 basis results in a potential minimum of $21. At these levels, dairies will struggle to cover depreciation and must brace for challenges, such as delayed capital improvements and mounting payables as bills extend beyond 30 days. Such pressures inevitably turn each month into a financial strain.

“Every dairy is different,” Sipiorski says. “There will not be enough to cover depreciation so capital improvement will not be made.”

According to Brad Herkenhoff, senior dairy lending specialist with Compeer Financial, it is difficult to speculate how low milk prices will go due to so many variables — like trade policies, domestic and international demand, increased domestic growing supply as cow numbers have increased, etc.

“One key factor we see is a wide variation in the basis from processor to processor, so with Class III looking to be in the $16/cwt. range, that basis will start to be extremely important as that mailbox price will fluctuate around producers’ breakevens,” he says.

Herkenhoff notes the focus shifts to higher components for superior energy corrected milk that will remain important. Echoing Siporski’s sentiments on knowing your cost of production, he says it is essential to:

Regularly review operating costs and look for areas of potential savings.
Be open to diversification or value-added products to increase revenue streams.
Stay informed about market trends and adjust production strategies accordingly.
Engage with your lender and consultants for guidance.

“Ultimately, staying informed and proactive in financial and operational management is key to navigating periods of low milk prices,” Herkenhoff says.

Beef Market Dynamics
With the national beef herd at the 1951 level and consumer demand remaining robust, selling crossbred calves even at a week old can significantly benefit a dairy’s finances.

“Beef-on-dairy has been a valuable tool for dairy producers to enhance profitability and financial resilience,” Herkenhoff shares. “In some of the numbers we have looked at, we are seeing a $2.50/cwt. up to $4/cwt. addition over and above milk prices from cull cows and bull/beef-cross calves.”

Putting it in a different context, Herkenhoff says prior to this beef market rally, for a dairy producer that didn’t sell excess crop or finish steers out, they would typically see their milk check represent about 93% of their overall income on average.

“The other 7% was cull cows, bull calves, misc. government payments, etc.,” he says. “Today, we are seeing milk represent closer to 75% to 80% of total income, and these cull cows and bull/beef-cross calves represent closer to 20% to 25% of overall income.”

As we get closer to year-end, Herkenhoff advises to continue to be cognizant of tax planning strategies.

“With the first half of 2025 being relatively favorable with profitable milk prices and above historical averages of beef-on-dairy sales, income tax strategies will be important again this year,” he says. “Be sure to meet early with your financial advisers and consultants to discuss strategies — whether that is deferring some income, prepaying expenses or possibly some capital expenditures. Make sure your financial team is on the same page with understanding your farm’s strategy.”

Each dairy operation is unique, and its financial strategies must be tailored accordingly. By understanding the economic landscape, engaging with financial partners, and exploring diverse revenue streams, dairy farmers can navigate the challenges ahead with greater confidence and resilience.

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Genetic Advancements in Dairy Helping Meet the Protein Craze Demand

Genetic Advancements in Dairy Helping Meet the Protein Craze Demand

Tue, 28 Oct 2025 14:36:26 GMT

The dairy industry is experiencing an exhilarating transformation, driven by an unprecedented demand for protein across the globe. Gregg Doud, president of the National Milk Producers Federation, captures this phenomenon aptly, describing it as a pivotal moment for dairy.

“Everywhere I go, I tell people we’re having a moment here on the dairy-side of the equation,” he says, emphasizing how dairy’s protein-rich offerings, from cheese to whey, are captivating consumers both domestically and internationally.

U.S. dairy producers are determined to capitalize on this opportunity. A standout example of their efforts is the extraordinary advancement in genetic testing, which have contributed to remarkable increases in production. A testament to this evolution is found at McCarty Family Dairy in Rexford, Kan. Their breakthrough in genetic enhancements has propelled an impressive leap in milk production, soaring from 70 lb. to over 100 lb. per cow daily.

“You can’t manage what you can’t measure,” says Ken McCarty, one of the owners of McCarty Family Farms. “In 2011, we were milking about 7,000 cows, and today we’re milking nearly 20,000 cows, and we’ve increased productivity by almost 50%.”

Enhancing Herd Health and Milk Quality

The impact of genetic advancements extends beyond productivity to significantly enhance herd health and milk quality. By leveraging genomic insights, the McCartys have reduced disease rates and improved animal welfare, leading to superior milk quality. The reduction in somatic cell count averages that now hovers around 120,000 to 180,000 is a testament to healthier herds and stringent disease management practices, exceeding customer expectations.

Feed efficiency is crucial, with feed constituting 65% of the overall budget. The McCartys focus intently on indexes such as TPI and DWP, which are critical in informing their mating and breeding strategies.

“We really focus on specific indexes, like TPI and DWP$ (Dairy Wellness Profit Index) with Clarifide Plus, and those are really the kind of driving indexes behind our mating and breeding strategies,” he says.

Dan Weigel, a geneticist at Zoetis, has worked closely with McCarty Family Farms over the years, helping guide their genetic testing program and strategy. Weigel says McCarty’s dedication to improving life for both cows and employees reflects their continuous pursuit of optimization.

Strategic Breeding for a Better Future

Strategic breeding at McCarty Family Dairy not only caters to the global demand for protein-rich diets but also aims at creating an environmentally sustainable future. While butterfat can be nutritionally altered more easily than protein, the dairy focuses on enhancing protein content through genetic selection. This approach is designed to reduce carbon footprints by optimizing feed usage and production.

“Genetically, I think we all can recognize that it’s easier to drive butterfat through diet than it is to drive protein through diet. So, protein is really a major focus in our genetic planning, because it is so much harder to drive from a nutritional perspective,” McCarty says. “And what we’ve poured into our cows, from a genetic perspective, has shown up in the bulk tank.”

The McCartys are consistently hitting nearly 7.5 lb. of components per cow, with their dairies in Kansas and Nebraska averaging 3.35% to 3.4% for protein.

“And that is on high-producing Holstein animals,” McCarty adds. “We have the luxury of having a milk processing plant between us and our customer, so not only do we see the on-farm productivity, but we see the enhancements in terms of efficiency in our processing plant. Higher component levels milk that just drives throughput and efficiency in our processing plant as well.”

Partnership and Collaboration

The McCartys success story is also a narrative of collaboration. Strong outside partnerships, such as Zoetis team support for on-farm data analysis and genetic testing strategy, help drive holistic improvement.

“When our customer wants something, they want it now, and we position our herds to deliver,” McCarty says.

Their ability to transition farms efficiently reflects a deep pool of data and tailored herd profiles.

“We have to position our herds to deliver what our customer wants,” he adds, noting that 88% of their births are A2A2. “We have the ability today to transition farms quickly. We have that data, and we have the herd profile to be able to do that.”

High-productivity breeding strategies directly benefit animal welfare, reducing carbon emissions and aligning with stringent brand ethics.

“Breeding for high health animals has a direct positive benefit, not only on our bottom line and the productivity of our cows, but in terms of brand risk management,” McCarty says. “The single largest thing we can do to drive down our carbon footprint is to increase output. So, all of those things come from a sharper and better breeding strategy.”

Pioneering Toward Tomorrow

A data-driven approach has set an inspiring precedent at McCarty’s Rexford dairy, proving managing dairy farming no longer relies on intuition alone. Data integration empowers farmers to make informed, objective decisions, boosting production and laying the foundation for sustained long-term improvements.

McCarty’s Rexford dairy is proof positive that milking 10,000 cows averaging over 102 lb. of milk a day shows that with the right management and the right facility, along with the right genetics, the future potential is unlimited.

“We’re very emotional guys, but we try to minimize the impact that our emotions have on our farm,” McCarty says. “So, we try to be very data driven. Genomic testing is a prime example of that.”

According to Weigel there is no one-size-fits-all prescription for making improvements on dairies.

“However, data makes a difference and using data that you can glean from your farms or from DHIA or genomic testing and allowing that to help guide you, you can’t go wrong with that,” he says. “As demand grows, so does the value of precision. Data-informed decisions are what drives us forward. That’s been a huge piece to improvements in the dairy industry over the past decade.”

Innovation at farms like McCarty’s proves that data matters, guiding improvements and empowering farmers to drive the dairy industry forward into a new era of excellence.

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3 Tips to Get Ahead of Low Milk Prices in 2026

Fri, 24 Oct 2025 09:26:11 GMT

As we are now in the third quarter of 2025, we are looking ahead to the next year with lower milk prices in the forecast. And while high beef prices have been the saving grace for many dairy farms, we cannot ignore that it’s time to once again tighten our management belts and find ways to increase cash flow while decreasing our cost of production. Here are three tips to get started today:

Opportunity #1: Maximize Each Employee
A dairy I visited recently was concerned about finding a replacement for an employee who had left. They were ready to rush to fill the open position and put a new person into the old role. But when I spent time observing the daily workflow of the current team, what I found was a lot of wasted time. Mornings started with long chit-chat sessions. As employees crossed paths during the day, it turned into standing around instead of moving onto the next task. By re-assigning tasks and re-organizing their day, we found that we actually did not need to hire another full-time employee at all. We also set time budgets for each task. That included cutting down the morning coffee conversation from two hours to 10 minutes.

Opportunity #2: Tune Up Your Teams
The next step to maximizing the potential of each team member is to fine-tune their skills. This can include training them to learn a new task, such as breeding. What is often overlooked is retraining. I’ve seen dairies suffering from low repro, only to discover that protocols had drifted or bad habits developed. Simply taking the time to train and retrain can keep costly mistakes at bay.

Opportunity #3: Understand Your Expenses, Then Look to Cut Them
Another main focus right now is going through cash flows with dairy farms to get an accurate picture of where they are financially. It starts with going through the numbers, and next it is looking hard at each line item of expenses and evaluating where costs could be reduced. The area with the most potential to save money is the same one that is the largest expense: feed. Analyze the ration and extra ingredients that might have been added in the past to fix a problem but are no longer needed. Get good quality forages up now and purchase additional carryover if you can. I’ve visited a few dairies lately that didn’t notice they were running short on feed before the new crop came in.

Ep. 266: 3 Biggest Challenges Dairy Farmers are Facing Right Now:
open.spotify.com/episode/4Y5bEanjohhb86WaGyFJSj?si=gh2K_7A_QhuMPJM-9Wr34A

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Why Beef-on-Dairy Is Shaking Up The Dairy Industry Landscape

Mon, 13 Oct 2025 13:52:49 GMT

The dairy industry is evolving, and producers are finding new ways to diversify their operations. For Ken McCarty of McCarty Family Dairy in Kansas, one big innovation has come through the rapid rise of beef-on-dairy practices — transforming what was once considered low-value into a substantial source of income.

“We remember the days when we were trying to sell Holstein bull calves, two for $5, and you couldn’t get rid of them,” McCarty recalled on the U.S. Farm Report live taping at World Dairy Expo. “And, bull calf sales went from something that you basically ignored in your budget to something that really today accounts for, depending on the month in the market, somewhere around 50% of our overall revenue.”

A Sustainable Practice
According to Dan Basse, president of AgResource Company, beef-on-dairy is not a fleeting trend but a long-term solution in an industry seeking stability.

“I don’t think we can get enough mama beef cows to come forward,” Basse says.

He anticipates robust prices in the future, although not consistently at peak levels, still valuable for dairy operations.

“I’m not saying they’re going to stay at $1,400, but I do believe there’s somewhere north of $700 to $800, which is still a lot of money for the dairy operation,” he says.

The 2025 Farm Journal State of the Dairy Industry report echoes this view, with three-quarters of operators engaging in beef-on-dairy methods such as breeding and raising. There’s evidence in semen sales too, with figures showing a 317,000-unit increase in the U.S. by 2024, as reported by the National Association of Animal Breeders (NAAB).

Added Value
At the 2024 Milk Business Conference, Dale Woerner from Texas Tech highlighted the added value that beef-on-dairy crossbreds bring to the beef supply chain.

“Beef-on-dairy crossbreds have added enough value to the beef supply chain that we should never change what we’re doing,” he asserts, advocating for the continuation of creating crossbred cattle.

Challenges and Concerns
Despite the positive strides in diversification and value addition, the dairy industry faces significant hurdles. Labor remains a critical issue, with a consistent demand for quality and quantity — a luxury dairies can’t afford to ignore given their year-round operations. In fact, immigrant labor contributes to 79% of the U.S. milk supply, underscoring the importance of these workers in sustaining the industry.

“Labor is an ever-present issue within the dairy industry. We’re not afforded the luxury of taking Christmas day off. So, accessing the quantity and quality of labor that we need is a huge concern,” McCarty says.

Market volatility also poses a challenge. McCarty notes the worrying impact of market downturns on rural communities, which are integral to sourcing feed and maintaining vibrant local economies. There’s a growing concern about the long-term effects on communities and the dairy industry’s future prosperity in these uncertain times.

“We’re heavily dependent upon the neighbor next door to source feed from, to keep our communities vibrant,” he says. “When we’re in market downturns like this, we grow very concerned about the long-term impacts that’s going to have on our communities and our ability to have our business prosper in the future.”

The rise of beef-on-dairy practices demonstrates the dairy industry’s adaptability and resilience in the face of challenges. While the path ahead includes obstacles like labor issues and market volatility, innovation in practices such as beef-on-dairy provides a beacon of hope and stability for producers like McCarty, the 2025 Milk Business Leader in Technology winner. Embracing these changes could ensure the vitality of the dairy industry for years to come.

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Enhanced Dairy Farm Efficiency: A Look at Jon-De Farms' Transition to Rotary Milking

Mon, 06 Oct 2025 11:35:34 GMT

In the ever-evolving world of dairy farming, producers are consistently looking for ways to amplify productivity and boost efficiency. Implementing new technologies in dairy farming requires a careful and thoughtful approach. For three forward-thinking producers, the decision to upgrade their parlors was not made lightly.

Drive for Efficiency
Jon-De Farms, located in Baldwin, Wis., embodies a forward-thinking approach to dairy production. In 2023, Jon-De Farms completed the construction of their DeLaval 60-stall rotary. Prior to this new development, the family milked 1,350 cows using two herringbone parlors – a double 10 and a double 16. The main reason for the upgrade was the need for greater efficiency.

“We felt like we weren’t milking enough cows given the inputs we had,” explains Mikayla McGee, the general manager of Jon-De Farms. Since their second parlor was built in 2000, she shares their labor costs have increased significantly.

“It’s hard to manage that many people and direct operations across two parlors,” she says. Both her and her father, Todd Doornink, had always envisioned a rotary as part of their strategic plan, dismissing the idea of robots due to the required scale of their farm.

Making the Choice
The family visited various rotary setups in Wisconsin before making their decision. While equipment and technology were not the deciding factors, McGee says service and parts availability played crucial roles. Ultimately, they chose DeLaval, which was conveniently located nearby.

Two-years post-installation, the family is pleased with their choice, particularly after increasing from a 40-stall to a 60-stall rotary for added flexibility.

“Having that extra downtime just makes our schedules easier,” McGee says.

One major goal of installing the rotary was to reduce the number of employees required on the farm. Although the impact was not as dramatic as anticipated, the number of working hours decreased, contributing to a better work-life balance. The technology was user-friendly, although McGee says the addition of the DeLaval TSR post dip sprayer was the biggest adjustment.
The new setup also improved herd health management. Previously, their vet spent long hours traveling between two barns.

“Our vet used to get here about five in the morning, and we wouldn’t get done until about two o’clock, and he’d kind of go back and forth between the two barns,” she recalls.

Now, they just catch cows off the rotary through the DeLaval sort gates to handle any herd health issues.

Milking now takes five hours, allowing employees to learn other responsibilities.

“Everyone is kind of cross-trained now, which really helps with worker satisfaction,” McGee notes, adding they have achieved their goal of becoming an employer of choice.

While examining return on investment for various purchases differently, building the new parlor was a clear necessity for Jon-De once they realized the inefficiencies of maintaining two separate parlors.

“Just the underlying efficiency that we gained right away out of the gates was amazing,” she says. “We saved a lot in one year just from reduced labor spending.”

With labor costs reduced for John-Dee, their new focus now shifts to feed costs. Previously outsourced, cropping work is now handled in-house with McGee’s husband, Matt, taking charge.

“Labor and feed are the two biggest costs,” she explains. “We feel we’ve tackled labor with the rotary, and now we’re honing in on feed costs.”

Jon-De Farms’ strategic move to a rotary milking parlor illustrates how thoughtful technology integration can drive operational efficiencies in dairy farming. Their experience serves as a testament to the profound impact that technological upgrades can have — enhancing productivity, enriching employee satisfaction and redefining cost management.

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Embrace Progress: Insights from Trailblazing Dairy Producers at World Dairy Expo

Fri, 03 Oct 2025 17:26:30 GMT

In today’s ever-evolving agricultural landscape, the concept of progressive farming is more than just a buzzword. It’s a mantra for forward-thinking dairy producers. At the National Milk Producers Federation Young Cooperators Progressive panel, held live at World Dairy Expo, four exemplary dairy farmers shared their unique perspectives on what it means to embody progressiveness in the modern dairy industry.

Continuous Improvement and Innovation
Megan Schrupp, co-owner of NexGen Dairy, emphasizes being progressive is all about continuous improvement. Her philosophy of always striving for betterment resonates deeply within the third-generation family farm in Eden Valley, Minn., which she owns with her husband, Tim. By asking fundamental questions about their practices and leveraging new ideas and technology, NexGen Dairy remains at the forefront of innovation.

Milking 1,200 Jersey and Jersey-cross cows, NexGen Dairy not only focuses on producing high-component milk for cheddar cheese but also prioritizes sustainability by using solar power to offset energy needs. Moreover, as a practicing dairy veterinarian, Schrupp ensures integration of advanced technologies to optimize cow health and comfort, embodying a commitment to improvement while upholding traditional values.

“The longer we’re involved, the faster it changes. So, being current and looking for that and asking ourselves, ‘Why do we do what we do? Is it always because we’ve done it?’” she says.

Embracing Technological Advances
Ron Fowler, a first-generation dairy farmer from Michigan, candidly shares he never considered himself progressive. Yet, his farm’s adoption of robotic milking systems and innovative soybean roasting techniques tells a different story. For Fowler, progressiveness means doing better each year, focusing on improving efficiency, animal care and sustainability across the 500 acres of land he manages with his family.

“I never considered myself progressive,” he says. “But here I am milking with robots and roasting my own [soy]beans,” he says. “Our pursuit of progressiveness has just been to do better than we did last year. We strive to do the best we can with each unit we have, whether it be a cow or an acre.”

The Triad of People, Animals and Environment
Laura Raatz, a co-owner and herd manager at Wagner Farms Inc. in Wisconsin, described progressive dairy farming as an ongoing journey of adaption and improvement. The farm’s guiding principles — focusing on people, animals and the environment — ensure a culture of investment in the team and continuous enhancement of animal welfare and land stewardship.

“Our farm motto is people, animals, environment. So, we break everything down with those three pillars. For us, it’s creating a culture and investing in our team. Because if our team isn’t thriving, our farm isn’t thriving either. I also think it’s continually improving the care for our animals. Right now, we’re utilizing a lot with technology and different practices. We’re really focusing on cow comfort, and we truly believe that with healthy animals comes higher quality milk, and then we’re also looking at how our practices are truly affecting our land and our environment and preparing for the next generation,” she says.

Innovation on the Farm
Joel Eigenbrood shares a similar outlook, underlining the necessity of questioning existing practices and seeking better methods. As the chief financial officer for multiple dairies in Michigan, Eigenbrood’s commitment to innovation led his family farm to develop a 50' wide hay mower, effectively doubling their productivity. His experience in dairy farm accounting and advisory roles further solidifies his position as a thought leader in both finance and innovation within the industry.

“There’s always better ways. Or at least, we need to know why we do it, what we do and how the way we do it,” he says.

In 2024, Joel was elected chairman of Foremost Farms USA, where he previously served as first vice chair. He also serves on the executive committee of the National Milk Producers Federation and on the board of the United Dairy Industry of Michigan.

Through the insights shared by these pioneering producers, it becomes clear progressive dairy farming is a dynamic blend of embracing change, leveraging technology and honoring essential values. As these leaders pave the way for future generations, their commitments to improvement and innovation remain crucial drivers of success in the dairy industry.

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The Rising Value of Beef on Dairy: Unlocking Opportunities and Transforming the Industry

Wed, 01 Oct 2025 15:54:52 GMT

In recent years, the dairy industry has witnessed a remarkable transformation with the integration of beef production. With native beef cattle numbers remaining low and demand for high-quality beef holding strong, there’s growing opportunity and a responsibility to raise these crossbreds with intent.

The Nutritional Foundation for Success
At the heart of this transformation lies the critical focus on nutrition, which significantly impacts the development of calves into valuable beef stock.

Laurence Williams, beef-on-dairy development with Purina Animal Nutrition underscores the importance of early life nutrition playing a pivotal role in ensuring the success of these animals. The first 20 weeks are crucial, with a focus on balancing quality and quantity of diet to develop not just muscularity but also traits such as marbling, which contribute to the premium quality of beef.

“That early investment in nutrition is important,” he says. “That means beginning with the end in mind and using every tool available, from genetics to nutrition to on-farm management, to ensure they reach their full potential at harvest.”

Williams says the shift toward specialized nutritional programs tailored to the genetic composition of crossbred calves has proven successful. The combination of milk replacer and calf starter grain is touted as essential in hitting developmental milestones, ensuring calves have the optimal start.

Economic Viability and the Broadened Supply Chain
This transition has brought about economic prospects for dairy farmers who are integrating beef production into their operations. While historically, dairy bull calves might have been given away or sold at low prices, the increased market demand for quality beef has incentivized farmers to retain ownership longer or engage in partnerships to maximize returns.

Interestingly, many dairies are capitalizing on the potential of retaining calves beyond the initial week of life. While selling calves early offers immediate profit with minimal risk, retaining them longer poses a significant opportunity for higher returns. This strategic choice depends upon evaluating the potential gains weighed against the costs of development and risks associated with extended nurturing and feeding.

“Most of the calves are leaving within the first week of life,” Williams says. “Although, we’re seeing more dairies raise some of these calves, even retain some ownership.”

The 2025 Farm Journal State of the Dairy Industry report hums a similar tune, showcasing nearly three-quarters of operators being involved in at least one beef-on-dairy practice, with breeding and raising being the most prevalent methods. Likewise, National Association of Animal Breeders (NAAB) reported beef-on-dairy semen sales grew by about 317,000 units in the U.S. in 2024.

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,” he says. “We should continue creating these crossbred cattle for the future.”

A Story of Connectivity: From Dairy to Beef
This beef-on-dairy story extends beyond the farm. It weaves through the entire supply chain, underscoring the significant role dairy farming now plays in the beef industry. Engaged speakers emphasized that today’s dairy producers are not only contributing to dairy production but are now integral to the beef supply chain. The need for consistent and quality beef has never been more apparent, and beef from dairy crosses is filling an essential gap in the market.

The introduction of these crossbred animals, often with Angus genetics, into the beef market means delivering not just quantity but high-quality beef cuts that are marbled and tender. Innovations in feeding and genetics have led to a consistent supply of premium beef, creating newfound opportunities for capitalizing on consumer demands for quality protein.

A Promising Future for Beef on Dairy
The future for beef on dairy is bright and dynamic. As the demand for quality beef grows, so does the potential for dairies to tap into this lucrative market. The industry stands at the forefront of a sustainable and profitable production model that aligns with the growing global need for quality protein sources.

The integration of beef and dairy is not just creating financial opportunities but is transforming the agricultural industry at large. By leveraging genetics, nutrition and innovative supply chain solutions, dairy producers are setting a precedent for valuable cross-industry collaboration.

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Three East Coast Dairy Producers Share Strategic Planning and Risk Management Lessons

Mon, 22 Sep 2025 11:43:20 GMT

Navigating through the volatile milk market, rising production costs and numerous other challenges require innovation, strategic planning and sometimes a little outside help. In recent years, the transformations of three east coast dairy farms: Shafdon Farms, JoBo Holsteins and Misty Mountain Dairy exemplify how strategic interventions can lead to a sustainable future.

Shafdon Farms: Rising from Rock Bottom
Shafdon Farms, nestled in Jefferson, Md., stands as a testament to resilience and strategic transformation. Ten years ago, Shafdon Farms was struggling under a high debt load and poor forage quality. Dee Shafer and her family faced significant challenges with no clear path forward.

“We hit rock bottom,” Shafer says. “We finally realized we needed some outside help.”

In 2015, the Shafers made a pivotal decision —hiring an accountant with extensive experience in agriculture. Two years later, and with assistance from the Center for Dairy Excellence, they assembled a profit team.

The significance of a business plan and a collaborative approach cannot be overstated for any farm looking to climb out of economic hardship. Shafdon’s profit team — comprised of nutritionists, accountants, lenders and various consultants — was the catalyst for crafting a meticulous business plan. This blueprint aimed at setting production targets, managing expenses and providing a roadmap for future growth.

“I can’t stress enough the importance of a profit team and a business plan,” Shafer says, reflecting on the pivotal role teamwork played.

By channeling their combined knowledge and efforts, the Shafers went to work on several fronts — expanding their herd, optimizing facility usage, hiring a new custom forage operator and refining crop and ration strategies.

Fueling Growth with Strategic Changes
A new partnership with a lender streamlined the farm’s payments, granting the Shafers enhanced flexibility in their financial decisions. In an ambitious bid to boost milk production efficiency, they transitioned their barley and alfalfa acreage to double-cropped corn and triticale, necessitating changes in herd rations.

Noteworthy farm improvements were made, including the construction of a new manure storage pit, a heifer barn and an addition of 72 freestalls to enhance cow comfort. They also introduced separate rations for high and low producers, tailoring their approach to maximizing output.

Since 2017, the advancements at Shafdon Farms have been profound. Their herd has expanded from 240 cows to more than 400 cows. Financial health, once characterized by a deficit of approximately $155,000, has reversed impressively, now reflecting a positive balance exceeding $140,000.

JoBo Holsteins: Strategic Expansion and Profit Margin Focus
JoBo Holsteins, nestled in the charming landscapes of Gettysburg, Pa., is a testament to the power of strategic decision-making in agriculture. In a sector where operational difficulties are commonplace, the farm has managed to transform its challenges into opportunities, shifting from a struggling enterprise to one flourishing with positive cash flow and a promising future.

Dale Brown, one of the visionary partners behind JoBo Holsteins Farm LLC, sheds light on the pivotal strategies that fueled this turnaround. The farm’s unique five-way partnership has been instrumental in navigating financial distress. Through collaborative efforts, they have emphasized operational efficiencies and profit margins, focusing on the profit margin per cow and overall capacity as the backbone of their success. This strategic focus has been crucial in expanding the dairy to its current scale of approximately 1,050 milking cows.

Leverage Expertise for Growth
Like other successful farming entrepreneurs, Brown credits peer groups and financial consultants for their indispensable role in the dairy’s revival. These external experts provided invaluable insights and frameworks for sustainable growth, paving the way for the farm to embrace financial stability. As the profits flow more consistently, the decisions related to expansion and development can now be made with increased flexibility and confidence.

With solid financial footing, JoBo Holsteins is ready to tackle its next growth challenge. While operational stability has been achieved, the focus shifts to future objectives.

“Our next challenge is where to go next,” reflects Brown, highlighting the farm’s commitment to continuous innovation and development.

Misty Mountain Dairy: Building a Foundation on Profit Margins
Mark Mosemann of Misty Mountain Dairy LLC recounts how his family farm rose from challenging times through a combination of good communication, team planning, dedicated work and a touch of faith. It’s a story of resilience and strategic growth for the Mosemanns, who are driven by the pursuit of financial sustainability and family legacy.

For Mosemann and his family, the cornerstone of decision-making lies in profit margins. Operating a 500-cow dairy alongside his wife Lauren, his parents, brother, and two members of the next generation, Mosemann emphasizes the importance of financial health.

“If you’re not making the margin, you’re not making the income to survive,” Mosemann candidly shares. The family’s ethos revolves around the idea that every decision must enhance their financial footing.

Strategic Growth Through a Master Plan
Adapting to a complex agricultural landscape requires a thoughtful master plan for growth. Mosemann urges fellow farmers to devise a strategy that aligns with family goals while remaining economically viable. At Misty Mountain Dairy, this translates into a comprehensive approach where risk management plays a crucial role. The family keenly balances the cost of homegrown feed against purchasing options and fosters advantageous purchase agreements.

The Art of Incremental Growth
Instead of aiming for spectacular immediate success, Mosemann and his family embrace the power of incremental achievements.

“Hit singles instead of going for a grand slam,” Mosemann advises.

By focusing on internal herd growth and enhancing forage quality, they aim for steady, sustainable improvements. For them, measured progress is the pathway to durability.

Networking stands as a pivotal component of Misty Mountain Dairy’s transformation. By connecting with industry experts and fellow farmers, the Mosemann family expanded their horizons beyond initial limitations.

“The more people you know, the more options and information you will have,” Mosemann explains. This exchange of diverse perspectives has empowered them to be innovative thinkers— sometimes even discarding conventional structures in favor of new approaches.

Each of these farms exemplifies how strategic risk management, financial oversight and a focus on profit margins over gross sales can transform a dairy operation into a successful business. Whether it’s hiring knowledgeable consultants, forming a profit team or developing a master plan, these steps can pave the way for a brighter and more profitable future in the dairy industry.

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