State of the Dairy Industry

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

Mon, 30 Jun 2025 13:00:00 GMT

Editor’s Note: This is one article in a series that is included in the 2025 Farm Journal’s State of the Dairy Industry report. The full 16-page report will appear in the May/June issues of Dairy Herd Management and Milk Business Quarterly and will be published in this space over the next several weeks. To download the full report for free click here.
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As we step into 2025, uncertainty looms like the turning of a new page. With a new administration at the helm and ongoing discussions around tariff regulations, it’s understandable if current news headlines make those who run a business uneasy. This sense of anxiety is nothing new to many. Yet, within the agricultural community, particularly among dairy farmers, there exists perpetual optimism riding on the tides of hope.

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

Dairy’s Moment to Shine

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

Chart the Course Forward

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

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

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

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

Despite Sunny Optimism: Ongoing Challenges Remain for Dairy Farmers

Thu, 26 Jun 2025 14:28:06 GMT

Rising Costs and Material Concerns

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

Labor Shortages: A Persistent Challenge

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

Regulatory and Environmental Hurdles

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

Market Volatility

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

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

Labor Challenges: A Call for Change and Innovation

Tue, 24 Jun 2025 13:00:00 GMT

Before and After the Pandemic

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

Ever-Present Labor Shortages

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

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

Boost Employee Incentives

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

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

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

Passing the Baton: The Importance of a Plan

Fri, 20 Jun 2025 13:00:00 GMT

Editor’s Note: This is one article in a series that is included in the 2025 Farm Journal’s State of the Dairy Industry report. The full 16-page report will appear in the May/June issues of Dairy Herd Management and Milk Business Quarterly and will be published in this space over the next several weeks. To download the full report for free click here.
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The future of the dairy industry faces significant challenges as a large portion of its operators approach retirement without having formalized succession plans in place. Our survey documented that a quarter of operators plan to retire within the next five years. This trend is understandable as 22% of these operators are over the age of 65, and 28% are aged between 55 to 64 years old. The next generation’s involvement is crucial, yet only 56% of operators under 45 are considering adding a family member as a partner in the coming years.

Industrywide Challenge

Despite its critical nature, only two in five operators have a defined succession plan, with larger operators more likely to have such plans. The lack of plans to transfer critical operational knowledge and business practices to successors is alarming. According to recent data, 59% of operators either lack or are unsure about having a defined succession plan. However, there is a silver lining: the percentage of operators with a defined plan has increased by six points since 2024, indicating a rising awareness of the importance of strategic planning.

Eye on Expansion and the Future

Looking ahead, nearly half of the operators plan to expand their operations within the next five years, whereas a similar proportion intend to maintain their current herd size. Compared to last year, fewer operators are planning to expand by adding additional sites. Interestingly, only 5% intend to reduce their herd size, with a small fraction, about 3%, planning to exit the business entirely from a lack of profitability or successors. One respondent admitted, “No one in the family wants to take over.” Another cited the difficulty of handing over the operation to the next generation as a significant barrier.

The evolving demographics within the dairy industry show the importance of robust succession planning. As the industry grapples with the imminent retirement of many of its operators, it must address the gap in succession plans to safeguard its future. By prioritizing these discussions and plans, the industry can ensure a seamless transition that maintains stability and continues the long-standing tradition of passing on family farms to the next generation.

Diversified Revenue Streams

Fri, 13 Jun 2025 13:00:00 GMT

Editor’s Note: This is one article in a series that is included in the 2025 Farm Journal’s State of the Dairy Industry report. The full 16-page report will appear in the May/June issues of Dairy Herd Management and Milk Business Quarterly and will be published in this space over the next several weeks. To download the full report for free click here.
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In recent years, dairy producers have faced a fluctuating roller coaster of milk prices, making it increasingly difficult to maintain profitability. However, many have managed to navigate these turbulent times by diversifying their income sources. By tapping into alternative revenue streams such as beef-on-dairy operations, agritourism, on-farm processing and carbon markets, producers have found innovative ways to stay in the black despite lackluster mailbox prices.

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

A Popular Choice: Beef-on-Dairy

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

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

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

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

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

Strategies for Success

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

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

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

Past, Present and Future: Sustainable Efforts at Work

Wed, 18 Jun 2025 13:04:26 GMT

Adoption and Awareness

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

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

Untapped Potential

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

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

Leading Sustainable Practices

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

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

A Future of Tech Synergy

Tue, 10 Jun 2025 13:00:00 GMT

Editor’s Note: This is one article in a series that is included in the 2025 Farm Journal’s State of the Dairy Industry report. The full 16-page report will appear in the May/June issues of Dairy Herd Management and Milk Business Quarterly and will be published in this space over the next several weeks. To download the full report for free click here.
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Technology has woven itself into the fabric of various industries, and the dairy sector in particular stands as a beacon of how it can be harnessed to modernize operations. This transformation is not merely about enhancing productivity but also animal welfare and a more sustainable future for the industry.

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

Current Trends in Tech

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

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

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

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

Renewed Confidence: The Dairy Industry is Optimistic in 2025

Wed, 04 Jun 2025 15:26:51 GMT

Profitability and Growth: A Positive Outlook

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

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

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

Evolving Challenges and Solutions

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

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

Navigate the Unpredictable Waters of the Year Ahead

Tue, 03 Jun 2025 13:00:00 GMT

Global Dairy Dynamics

Strong pricing in Europe and New Zealand created openings for U.S. dairy products to move out of the country without requiring significant downward price movement. Cheese exports increased by 22 million pounds in January and February, up 16%. Meanwhile, in the first quarter, CME spot block cheddar prices averaged $1.81 per pound, up 20% from the same period last year. That’s a win. The butter story has similarities. Exports increased by more than 8 million pounds in January and February, an 84% increase. CME spot prices were lower in the first quarter but not in a devastating fashion.

Prevailing price gaps favor more movement in the months ahead, with U.S. cheese and butter trading at large enough discounts to keep the purchase orders rolling.

Potential Trade War Tensions

An unfolding trade war potentially complicates things, of course. We don’t know how the story will end. Mexico is the pivotal player for cheese and nonfat dry milk. If things don’t get ugly, that will go a long way toward steadying the price boat. South Korea and Japan are also important players in the cheese arena. China looks like it’s going to be a sore spot, with major implications for the U.S. whey complex. A significant portion of U.S. whey, permeate and lactose exports move into China. If tariffs remain high, market prices could struggle, dinging other solids values in U.S. producer milk checks.

A Cautious Approach to Heifer Demand

The other big story for 2025 (and beyond) also features many moving pieces and unknowns. When will we begin to see replacement heifer availability turnaround? Beef-on-dairy breeding has become so widespread that we’ve run down dairy heifer inventories. At face value, the incentives continue to point in that direction. High beef prices and low cattle numbers keep pushing up the value for day-old dairy cross beef calves. The bird in hand, a $900 check for a day-old animal, sure seems to be more appealing than the two in the bush.

Yet, we wonder if more producers are starting to zag while everyone else is zigging? Are they backing off beef on dairy to ensure their ability to grow their own operations? Are some shifting breeding even a little, betting the potential rewards for raising dairy heifers are worth the risks?

The conversation is as fascinating as it is consequential, but it will be some time before we know if, and how much, the trend is shifting.

This is the 2025 dairy industry. Short on certainty. Long on volatility. Sharp management is more crucial than ever.

A Front Row Seat to the Revolutionary Transformation of Milk Production

Fri, 30 May 2025 13:00:00 GMT

Key Changes in Milk Components

One of the most notable changes is the shift in milk component levels, which is crucial for both producers and processors. Over 80% of the U.S. milk supply is directed into manufactured dairy products that depend on butterfat and protein content. The demand for these components is climbing, with more than $8 billion worth of new dairy processing capacity expected to come online by 2027.

Butterfat levels have set new records for four consecutive years, with 2024 seeing an average of 4.23% nationwide, according to USDA’s National Agricultural Statistics Service. Protein content is also on the rise, with new records set each year from 2016 to 2024. The average protein content of U.S. milk reached 3.29% in 2024, based on Federal Milk Marketing Order data.

Evolution of the Cow Herd

The structure of the cow herd is also shifting. Data from the February U.S. Milk Production Report indicates there are 8.96 million milk cows on farms across 24 major U.S. states, marking a significant increase. This growth of 75,000 head from the year prior represents the largest milking herd since May 2023.

Phil Plourd, president of Ever.Ag Insights, notes the significance of this increased cow power, suggesting it could possibly contribute to robust milk production growth in the coming months.

Michael Dykes, CEO of the International Dairy Foods Association, stresses the industry’s eagerness for growth among both dairy producers and processors.

“Our farmers want to grow, and so do our processors. If we aren’t growing, if we aren’t looking toward the future, we’re going to get surpassed by others,” Dykes explains.

Expansion of U.S. Dairy Exports

U.S. dairy exports have shown a 2% increase, reaching $8.297 billion in 2024. This is second only to the $9.655 billion that was garnered in 2022. Krysta Harden, who serves as the CEO of the U.S. Dairy Export Council, points to the ongoing uncertainties surrounding U.S. government tariffs as a potential challenge. But at the same time, she emphasizes the strong global standing of U.S. dairy products.

“We have such a reputation for producing really high-quality, consistent products that customers are able to count on,” Harden explains.

As the industry continues to evolve, it carries a reputation for quality. This makes U.S. dairy products well-positioned to expand their influence in global markets, even amid changing economic conditions.

A Promising Horizon for U.S. Dairy

Tue, 27 May 2025 13:00:00 GMT

Editor’s Note: This is one article in a series that is included in the 2025 Farm Journal’s State of the Dairy Industry report. The full 16-page report will appear in the May/June issues of Dairy Herd Management and Milk Business Quarterly and will be published in this space over the next several weeks. To download the full report for free click here.
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Farm Journal’s State of the Dairy Industry 2025 report provides a comprehensive overview of the current state and outlook of the dairy industry. The report surveyed 400 dairy producers across the U.S., focusing on those with cow herds that exceed 100 cows. The survey aimed to understand producers’ future plans, the challenges they face and their overall sentiment toward the industry.

The results of the survey have revealed an air of optimism among dairy operators. The biggest takeaway was their increased confidence as compared to a year ago. Financial and attitudinal indicators suggest a positive trend, with producers generally anticipating more profits this year compared to last. Furthermore, there is an increased consensus among surveyed producers that they hold an optimistic view for the future of the industry. Many are confident about the milk market’s potential as well.

The Road Ahead

While the path forward is not without its challenges, it seems that the dairy industry is preparing to tackle these with a renewed sense of optimism. The sentiments captured in the survey indicate that operators are adapting and planning strategically for continued success.

This survey followed a similar format to that of the 2024 report, allowing for comparison and identification of trends over the past year. The purpose was to understand not only the current challenges but also the direction in which the industry is headed.

As the industry continues to navigate through its current challenges, producers continue to embrace innovative practices and unlock further opportunities for growth. There is a promising horizon ahead for the dairy industry, and if these trends continue, it could lead to a more sustainable and prosperous future.

Farm Journal’s State of the Dairy Industry 2025 report underscores the resilience and the adaptability of dairy producers, further strengthening the industry’s foundation for the years to come.

(Farm Journal)

Dairy’s Time is Now

Fri, 23 May 2025 13:00:00 GMT

Butterfat and Protein on the Rise

Beyond migration shifts, the very components of milk leaving farms are undergoing transformation. The USDA’s National Agricultural Statistics Service reports that butterfat
levels have consistently hit record highs over the past four years, reaching an average of 4.23% nationally in 2024. Similarly, protein content has also broken records each year from 2016 to 2024, with an average of 3.29% in 2024, according to the Federal Milk Marketing Order data.

Beyond the Milk Check

One of the most exciting developments in the industry is the discovery of innovative revenue streams beyond the traditional milk check. A standout opportunity is the significant value in beef-on-dairy calves. Doud highlighted, “What an enormous value that is,” referring to the $800 to $900 price tag for a day-old black calf. This opportunity showcases the dynamic nature and evolving economic possibilities available to today’s dairy farmers.

The anticipated gains in milk processing infrastructure signal enormous potential for the U.S. dairy industry. These advancements are not just vital for addressing the burgeoning domestic demand but are also crucial for capturing a larger segment of the international market. This period could mark a pivotal juncture for U.S. dairy, presenting a chance to expand and innovate — with sustainability and prosperity as guiding principles.

The U.S. dairy industry stands on the brink of significant evolution, driven by strategic geographic shifts, changing milk components and innovative revenue strategies. For dairy farmers and stakeholders alike, the current landscape offers immense opportunities to adapt and thrive. As we look to the future, embracing these changes could ensure the industry remains robust, sustainable and globally competitive.

Global Cheese Appetite is Powering Growth for U.S. Dairy

Wed, 21 May 2025 19:27:56 GMT

William Loux, senior vice president of global economic affairs for the National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council (USDEC), says the dairy industry is finally turning a corner. After years of market volatility, he sees growing stability on the farm and rising international demand, especially for cheese and dairy proteins, as encouraging signs of progress.

“I’m pretty optimistic about [the state of the dairy industry],” Loux says. “I’m not always the optimistic person as the numbers guy, I kind of give the ‘real’ talk, but in general, profitability on the farm looks good, and we’ve got a situation where demand, especially internationally, is starting to recover.”

He shared these insights in a recent appearance on “AgriTalk” where he discussed the current state of U.S. dairy and what is driving renewed optimism across export markets.

Cheese is Leading the Charge
While domestic cheese sales remain soft, global cheese demand is accelerating rapidly. Much of that growth is coming from international restaurant menus that are incorporating cheese in new and creative ways.

“I think a lot of that goes to work that the export council has done,” Loux says. “We have a whole cheese marketing program as part of that group internationally. And you can look at [these restaurants] adapting their menus to local tastes, but I think the big success that we’ve also had, for example in Korea, is looking at traditional restaurants, like Korean barbecue, that now has cheese dips as offerings at many of those restaurants. So it’s not just the U.S. coming in and saying, ‘here’s our [restaurant] companies, how do you adapt it.’ It’s the local companies that are also seeing opportunities [to add dairy].”

Loux says this growth in demand is broad-based and happening faster than before the pandemic.

“Over the last 12 months, 12 out of the top 13 global cheese markets have all increased their demand, and that is unusual,” he says. “We are growing at twice the speed we were pre-COVID. The U.S. is the one benefiting here first and foremost, we are growing faster than any other exporter in the world, but we aren’t the only ones. New Zealand and Australia both had record years, Europe is growing, too, so the competition isn’t evading. But at the same time, this demand is a bright spot for global dairy prices. We are seeing good cheese demand [internationally], which we desperately need right now, and that is a positive signal for dairy.”

Beyond cheese, other dairy products are gaining traction in international markets as well. Whey proteins and milk proteins, in particular, are seeing increased demand across Asia. Still, Loux acknowledges the market is mixed.

“When you look outside of the cheese market at everything else, non-fat is a little soft; dry whey — we have some trade issues with China,” he says. “But I look at this market and say, hey, we are finally starting to turn the corner on some of this global demand. There are plenty of risks ahead, but I look at the state of the industry and say that we’ve weathered through some pretty tough times, especially in 2023 and into 2024, and now I think with the capacity, there is a great opportunity for U.S. dairy moving forward.”

Exports as a Balancing Act
Exports play a crucial role in stabilizing and expanding the U.S. dairy industry. Loux points to two key advantages that exports provide.

“First off, it brings balance to your milk check,” he says. “Fundamentally, even as we see higher butterfat in our components, we’re not making pure cream out of the cow. So, we have to find opportunities to grow our skimmed side, and that’s our proteins and caseins. And internationally, folks are demanding more of that and are asking for it — 75% of our nonfat dry milk and 50% of our dry whey goes overseas. And we fundamentally need that to keep our prices balanced.”

Loux also sees exports as a vital engine for long-term industry growth.

“Over the last number of years, the U.S. has increased its cheese exports more than we have increased our domestic cheese consumption,” he adds. “Mexico in particular has been an incredibly strong cheese market for us over the last number of years, but even as they’ve slowed down, because we’ve emphasized being in multiple markets, particularly in Asia and elsewhere, U.S. cheese exports are still on pace for another record year.”

Much of this momentum is tied to protein’s growing popularity worldwide. Once limited to sports nutrition and infant formula, dairy proteins are now appearing in everyday products such as cookies and soups in Japan, signaling a broader shift in consumer demand across global markets.

Expanding Access into the UK
Following the recent announcement of a trade agreement between the U.S. and the United Kingdom, there is cautious hope for increased dairy exports to the region. But Loux urges a measured outlook.

“Right now, not a whole lot has actually been completed,” he says. “When we look at reading the fine print, it really looks like they’ve only agreed to keep talking, and I think they’ve avoided some of the tariffs within the reciprocal agreement. So, we aren’t seeing much access for dairy yet.”

Despite the lack of movement, Loux points out the UK does present significant potential for U.S. dairy exports, as it is the largest cheese-importing country in the world. However, roughly 90% of those imports come from European suppliers.

“As we look at opportunities, the UK buys, imports and eats a lot of cheese,” Loux states. “But they also need proteins, and that’s what the UK wants. And the U.S. is the fastest growing exporter of that product.”

Loux says that if a formal agreement can be reached, the U.S. dairy industry stands to benefit. Still, it all depends on the final details.

“We need to wait to see the fine print and figure out what this deal actually looks like,” he adds.

Tariffs: Short-Term Pain or Long-Term Gain?
When it comes to tariffs, Loux sees them as a necessary part of the conversation, but not a long-term solution.

“I’ll be honest with you, I’m a free trader,” he says. “I’m a fan of exports, but I’m also a fan of consumer choice. At least as it comes to within the U.S. and everything else, I’m fine with Kerrygold or whatever being on the shelves. But I also want the U.S. [dairy] to have access to Irish shelves, right?”

Lack of reciprocal trade, particularly with Europe, remains a major concern for Loux. In some cases, such as retaliatory tariffs on European butter and cheese, there might be justification. But Loux warns that blanket tariffs can have unintended consequences on consumer behavior and the broader economy.

“Ten percent tariffs certainly do have an inflationary aspect to them, and I think that is the risk,” he says. “I’m not going to get too much into the macro side, but if you see U.S. consumers stop going out to eat as much because they’re just in a worse financial position, that’s a risk for dairy markets.”

Rather than more tariffs, Loux advocates for trade agreements that promote open access and growth.

“What we’ve always advocated for in international markets is twofold,” he states. “When we go and have agreements with places like Korea or Japan or Central America, our argument is usually that lower tariffs actually can grow demand overall and benefit both the local industry as well as U.S. dairy exports. And as we look at this internationally, that’s where I’d like to see lower tariffs, not more tariffs. I want more demand and consumption for everybody.”

For Loux, the goal is simple.

“From an economic perspective, I kind of want more demand and more consumption for everybody,” he says.

Trade to India Remains Out of Reach
Recently, India has dominated the conversation when it comes to global trade. However, Loux believes U.S. dairy trade with the country will likely remain out of reach.

“It comes up in every trade conversation, and I think it is probably the most asked question, or most asked country I get asked about,” Loux says. “It’s the biggest dairy consumer in the world. It would make sense as an opportunity for U.S. dairy.”

But despite the sheer scale of potential demand, the barriers remain firmly in place.

“Between the non-tariff barriers and the political sensitivity around dairy, I have no expectations that we’re getting any sort of real access into India,” he explains.

This isn’t a new struggle.

“We have tried for 20 to 30 odd years to get access into India,” Loux adds. “The Kiwis have tried for 20 to 30 years to get access into India. Canadians, too. So far, no one has.”

He remains skeptical about any breakthroughs on the horizon.

U.S. Dairy Remains in a Strong Position
While dairy has certainly seen its fair share of challenges throughout 2025, Loux is encouraged by where U.S. dairy stands today. After years of volatility, he sees signs of recovery, especially as global demand for cheese and proteins gains momentum.

While hurdles like tariffs and trade barriers remain, Loux believes U.S. dairy is well-positioned for growth. He points to recent export success, expanding opportunities in markets like the UK, and the industry’s ability to adapt to shifting global demand.

Challenges with countries like India persist, but Loux is confident that with continued focus and smart trade strategy, U.S. dairy can keep gaining ground worldwide.

Your Next Read: An Incredible Birdseye Look at the State of the Dairy Industry

An Incredible Bird's-Eye Look at the State of the Dairy Industry

Mon, 19 May 2025 13:19:06 GMT

Technology Integration

In an era where technology permeates nearly every aspect of life, the dairy industry stands at the forefront of this transformative wave. The integration of technology is no longer just an option; it has become a crucial step toward creating a more efficient and sustainable dairy industry. From feeding systems to health monitoring devices, technology helps dairy farmers optimize operations and ensure animal welfare.

A recent survey highlights a significant shift in the adoption of technology within the dairy sector. Remarkably, two-thirds of dairies now use at least one form of feeding technology. These innovations are designed to streamline the feeding process, providing precise nutrient delivery to livestock and reducing waste. The result is a noticeable improvement in both efficiency and sustainability.

Diversifying Revenue Streams

In today’s changing economic landscape, many dairy producers are finding innovative ways to sustain and grow their businesses. The key to survival during these turbulent times seems to be diversification.

Farm Journal’s recent survey reveals approximately one-quarter of dairy producers have embraced alternative land or dairy add-on revenue streams. This shift underscores the industry’s agility and adaptability as producers look for various avenues to boost profitability.

One strategy gaining traction is the beef-on-dairy operation. An impressive three-quarters of operators are now involved in at least one beef-on-dairy practice, with breeding and raising being the most common methods. Though there has been a decline in the number of producers raising animals under their beef-on-dairy operations over the past year, there is a notable increase in the sale of branded beef products. This shift highlights the evolving dynamics within the industry as producers adapt to market demands.

Next-Gen Transfers

A significant concern facing the industry today is the impending wave of retirements among dairy operators, many of whom have not established formal succession plans. This situation is becoming increasingly urgent, with surveys indicating that a quarter of these operators intend to retire within the next five years.

Contrary to the retirement trend, there is also a strong movement toward growth and expansion within the industry. Almost half of the operators express a desire to expand their operations in the near future. Such ambition suggests confidence in the industry’s potential and reflects a proactive approach to ensuring a sustainable future. At the same time, an equivalent number of operators are planning to maintain their current herd sizes, indicating a focus on maximizing efficiency and resource management.

Sustainability Program Awareness

Farm Journal’s recent survey reveals an array of insights regarding current sustainability practices and the prevailing awareness surrounding them. While the inclination toward adopting sustainable practices is reassuring, a deficiency in program awareness raises concerns that need to be addressed.

Encouragingly, over half of survey respondents (63%) reported participating in at least one sustainable practice. This trend is indicative of a growing societal shift toward environmental responsibility. Interestingly, larger operations, particularly those with substantial herd sizes and extensive acreage, tend to embrace sustainability more comprehensively. This trend is most pronounced in the Western region.

Reality of Workforce Shortages

A recent survey highlights the growing dependency of the dairy industry on non-family labor. For many respondents, non-family members consist of at least 50% of their workforce. This shift is indicative of broader changes within the industry as traditional family-run farms adapt to meet growing demands. However, hiring and retaining workers continues to be significant challenges. With evolving labor-related aspects indicating enduring challenges, the industry must explore viable solutions to continue thriving.

Despite the adoption of new technologies, the challenges of hiring and retaining a reliable workforce remain. Farmers must continue to balance the integration of technology with human labor, ensuring that both aspects work in harmony to drive growth and productivity. These changes suggest a long-term shift in how labor is approached, maintaining traditional farming values while embracing modern advancements.

Optimistic Horizon

The dairy sector is witnessing renewed confidence, energized by innovative strategies and fueled by a younger generation of forward-thinking dairy operators ready to embrace change. Their willingness to adopt advanced technologies and improved herd management techniques is reshaping the landscape of dairy farming. By integrating strategic solutions, these operators are setting a new standard that promises to uplift the entire industry.

According to surveys, 44% of producers plan to expand their operations in the next five years. This drive to scale indicates a strong belief in the trajectory of the dairy industry and its ability to thrive amid changing global dynamics.

The 2025 Farm Journal State of the Dairy Industry Report is available for download here .

Help Shape Tomorrow: Take Farm Journal’s Dairy Survey Today

Wed, 22 Jan 2025 17:20:43 GMT

As we continue to navigate the complex landscape of modern agriculture, staying informed and proactive are keys to success. Farm Journal is dedicated to delivering relevant content that addresses both the challenges and the opportunities that dairy farmers face. This commitment is exemplified in our ongoing efforts to produce a comprehensive State of the Dairy Industry report for the second year in a row.

The State of the Dairy Industry report aims to capture the true pulse of dairy producers’ mindsets — what keeps them awake at night and what plans they hope to implement in the next two to five years. As dairy farmers, your experiences and perspectives are invaluable in compiling information that accurately reflects the state of the industry today and where it is headed tomorrow.

Your Participation is Key
To gather the most accurate data, we are seeking your participation in our research study. By joining this study, you contribute to a clearer, data-driven vision of industry trends and help shape future initiatives. Thank you for considering this opportunity to impact the broader dairy community.

This survey will take approximately 10 minutes of your time. Your feedback is crucial, as we plan to share the results of our 2025 State of the Dairy Industry report in June. Rest assured your responses will be treated with the utmost confidentiality. The answers you provide will be combined with data from other respondents, ensuring your input remains anonymous.

Read insights from the 2024 Farm Journal State of the Dairy Industry Report.

Incentive for Your Time
To express our gratitude, participants who qualify and complete the study will have a chance to win one of two $250 gift cards to a retailer of their choice. This is a small token of our appreciation for sharing your valuable time and opinions.

Your voice is important, and by participating in this survey, you have the opportunity to influence the direction of the dairy industry for years to come. Join us in creating a brighter, more informed future for all dairy producers.

Click here to take the survey.

Four Key Insights from the 2024 Farm Journal State of the Dairy Industry Report

Fri, 13 Dec 2024 15:27:13 GMT

The dairy industry is witnessing a dynamic transformation, and it shows no signs of slowing down. In an era where adaptation and forward-thinking are crucial, understanding these shifts helps stakeholders stay ahead of the curve. A comprehensive survey conducted among U.S. dairy producers’ sheds light on the emerging trends and future investments shaping the industry. The 2024 Farm Journal State of the Dairy Industry Report unveils four critical takeaways that provide valuable insights into the evolving landscape.

Embracing a Growth Mindset
Despite a myriad of challenges, the majority of dairy producers are maintaining an optimistic outlook. The survey reveals that over two-thirds of respondents have experienced profitability over the past five years. In addition, more than half of the producers are fostering a growth mindset, with ambitions to expand in some capacity within the next five years. This expansion manifests in diverse ways—approximately one-third of respondents intend to increase cow numbers or establish new sites, whereas others are exploring diversification of on-farm revenue streams and improving facilities to enhance cow comfort and productivity.

Diversifying with Alternative Profit Lines
Stabilizing finances is a priority for many dairies, with an increasing number of producers exploring alternative profit sources. The potential for additional income streams beyond traditional milk production is becoming increasingly apparent. From on-farm processing and agritourism to the promising beef-on-dairy trend, opportunities for alternative income are manifold. Notably, only 20% of respondents are operating solely as dairy businesses. The beef-on-dairy approach, in particular, emerges as a lucrative avenue for many producers, with nearly half selling their crossbred calves shortly after birth or retaining them for a longer period to maximize returns.

Strengthening Processor-Producer Relationships
Approximately half of the dairy operators surveyed have expressed concerns over the robustness of their relationships with processors and the future stability of milk markets. However, a silver lining exists: 70% see potential in dairy innovation and processing as a pathway to future opportunities. Despite the current hesitation, most operators do not consider vertical integration a feasible option for achieving market stability at this stage.

Addressing the Succession Challenge
One of the industry’s notable challenges is the transfer of operations from one generation to the next. A stark 46% of respondents indicate the absence of a clear succession plan or are unsure of their operation’s plans. Regardless of herd size, the inclusion of family members or partners in dairy operations over the next five years ranks high on the agenda for many. Even the most efficient and profitable herds recognize the necessity of a seamless transition plan to ensure sustained success.

Looking Ahead: Innovation and Growth
The year 2024 has been a wild ride, marked by fluctuating prices that pushed producers to seek stability actively. As the global population is projected to be near 10 billion by 2050, efficient production methods are imperative. Fortunately, U.S. dairy producers show remarkable resilience and a fearless attitude towards embracing innovation, productivity, and sheer determination.

The insights from the 2024 Farm Journal State of the Dairy Industry Report highlight a sector poised for growth, adaptability and new opportunities. By fostering strong relationships, innovating profit streams, and securing generational continuity, the dairy industry stands on the cusp of a promising future. For full access to the report: dairyherd.com/state-dairy-industry

The Future of the U.S. Dairy: Growth, Challenges and Opportunities

Mon, 12 Aug 2024 15:47:49 GMT

The U.S. dairy industry is poised on the brink of significant growth, as illustrated by Farm Journal’s State of the Dairy Industry report. According to the report, nearly 70% of the respondents experienced profit in the past five years, and more than half plan to expand in the next five years.

Erica Maedke, vice president of Insights for Ever.Ag, highlights that U.S. dairy producers have long been constrained in their ability to grow. However, now, with billions of dollars allocated for future growth, the landscape is indeed changing.

“In the center part of the country, there are some huge expansions as we think about the Lupino plant in Lubbock, Texas,” she says. “Millions of pounds of milk a day have to come from somewhere. The Hilmar plant in Dodge City, Kansas, is going to need roughly 8 million pounds of milk a day. That’s a lot of cows that aren’t there today. As we look at that southwestern region especially, it’s going to be a deficit region. In the past they had balanced additional milk from other regions. Now they’re going to be needing milk to come from other places.”

Despite these growth opportunities, Maedke points out that the high cost and short supply of heifer replacements could pose challenges to increasing milk production. The ability to flip the switch to higher production will be tested.

Although Michael Dykes, president and CEO with International Dairy Foods Association (IDFA), is extremely optimistic about dairy farmers’ adaptability and willingness to grow.

“I know dairy farmers; if the market is there, they will grow,” he confidently states., outlining that large dairy farmers especially want to grow. “If there’s a market demand for the milk, they’ll find a way to start producing more heifers with sexed semen. They’ll find a way to make the terms they will work with rations; they’ll increase the milk production per cow. I’m a firm believer that dairy farmers respond to the market signals, and I believe I’m a firm believer that the milk will be there.”

The Importance of Export Markets
Stephen Cain, senior director of economic research and analysis with National Milk Producers Federation (NMPF), emphasizes that the export market has become more critical than ever, given the upcoming surge in milk processing.

He explains, “That’s a very key piece here,” highlighting the tension between what is being produced and the capacity to move and absorb it domestically. “We’re going to need to look towards the export market to move some of this additional capacity.”

Cain points out that the excess production capacity might force plants to either reduce their runtimes or not operate at full capacity. He warns that with more processing capabilities in the pipeline, this could potentially lead to the closure of inefficient plants. “The export market is going to be key for us moving some of this product overseas,” Cain says.

The need to engage more with export markets comes with its own set of challenges and opportunities. By gaining market share overseas, the industry can potentially navigate the increased competition from the European Union and New Zealand.

“That creates the challenges and opportunities as well for us to gain market share in places where we’re seeing increased competition from the EU and New Zealand,” he says.

To delve deeper into these insights and hear more about the challenges U.S. dairy producers face, listen to the full Farm Journal State of the Dairy Industry webinar at: Farm Country Update - Farm Journal

Unveiling a Glimpse into Dairy's Future

Fri, 26 Jul 2024 11:58:31 GMT

Over the last decade the dairy industry has changed at lightning speed, and it has dramatically changed from the era of hand milking cows one-by-one. From the adaptation of technology to increasing efficiencies and overcoming challenges that seem to come at a fast pace, dairy producers have rolled up their sleeves and leaned forward to embrace opportunities to advance their farms, while tackling the non-stop challenges that face the industry.

Michael Dykes, CEO of International Dairy Foods Association (IDFA), shared at the Dairy Forum in Phoenix earlier this year that our industry has a growth mindset.

“Our farmers want to grow and so do our processors. If we aren’t growing, if we aren’t looking towards the future, we’re going to get surpassed by others,” he says, sharing that 60% of the processing executives have expressed optimism for 2024 and 73% plan to increase their investments over the next 3 to 5 years.

Phil Plourd, president of Ever.Ag Insights offers a different perspective, saying that his back-of-the-envelope math shows today’s interest costs on building a 6,000-cow dairy are running about 60 cents per hundredweight above 2021 levels. Plourd says, “that could limit producer’s expansionary appetites.”

Still, the trendline illustrates the continual migration of dairy herds from coastal areas coming inland. States like South Dakota are skyrocketing with growth. In January 2024, the United States Department of Agriculture (USDA) announced that the total number of dairy cows in South Dakota totals 208,000, up 70.5% since 2019. To put that into perspective, South Dakota’s dairy herd has added 118,000 cows over the past 12 years.

Evan Grong, sales manager for Valley Queen, says three main factors attract producers to South Dakota.

“We attribute the current and projected growth in the I-29 region primarily to access to feed production, abundant groundwater and dairy processing investments,” he explains.

Other states are not fairing so well mainly because of environmental regulations and rising labor costs. This is one reason dairy producer David Lemstra moved from California’s Central Valley to South Dakota four years ago. Lemstra, who milks 4,000 cows near Sioux Falls, concurs with Grong, saying three things led him to call South Dakota home—feed, permits and processing. Although he adds that California political management played a factor in their decision to move east.

“It’s not one blow that took us out of California,” Lemstra says. “It was death by 1,000 cuts.”

With more than $7 billion in planned processing investments in the pipeline with much of that popping up in the midsection of the country, indeed, major future growth will come to states like South Dakota and Texas. For example, South Dakota processor, Agropur, increased its capacity by 2 million lbs. in 2023 and Valley Queen is adding 3 million lbs. to its daily processing that will be finished later this year. In Texas, Panhandle Products increased its processing capacity by 4 million lbs. in 2023 and Leprino Foods is expected to finish construction to add 8 million lbs. Similar, Hilmar Cheese is expected to finish construction on a green site facility in Dodge City, Kan., for 8 million lbs. later this year. Grocery giant, Walmart announced new milk processing plants to open with one in Valdosta, Ga., expected to open in 2025 and another in Robinson, Texas, with plans to become operational in 2026.

Back on the farm front, lackluster mailbox prices delivered early in 2024 has forcing dairy producers to find a way keep their legs beneath them. Still, many producers across the county have their eyes wide open to the future and are eagerly embracing opportunities to grow any way they can.

The largest dairy cooperative, Dairy Farmers of America (DFA), shared that they conducted a member-survey that illustrates that by 2030 they are anticipating only having 5,100 member farms. Corey Gillins, chief milk marketing officer with DFA, shared that this is a drastic drop from their current membership of nearly 11,000 member-owner farms. Gillins noted at DFA’s annual meeting in Kansas City in mid-March that more than 500 of their member farms exited the industry in 2023.

Survey Results
Following is our State of the Dairy Industry report where Farm Journal surveyed 210 dairy producers throughout the U.S. who range from 100 to 20,000-cow herd size. Our forward-thinking survey asked participants about challenges that face them, along with opportunities. We asked what growth looks like for their dairies and ultimately what do they envision their operations to look like in the next 5-7 years. We are proud to present to you the 2024 Farm Journal State of the Dairy Industry report that shares several insights of what’s to come in the years ahead.

One clear insight documented is that U.S. producers are feeling the mountain of challenges that face them—from labor issues to regulatory pressures, to the overall economic hurdles of running a dairy farm. Despite all of that, the outlook from dairy producers appears to be promising. More than two-thirds of dairies reported 5-year profitability, and more than half have a growth mindset with plans to grow in one way or another in the next five years. More than a third of the survey respondents shared that they plan to grow by increasing cow numbers or adding new sites, while others will invest in on-farm revenue streams or upgrade their facilities to increase cow comfort and production.

Several Challenges
Respondents also shared that milk’s volatile pay price was a constant headache as it emerged as a top concern for nearly a third of respondents. Additional top concerns for producers included instability, lack of experience and the overall rising cost of inputs.

2024 has caused dairies to face low milk prices and uncertainty, both of which make it hard to meet their farm’s individual goals. When you factor in high inflation and labor challenges, especially when it comes to retention, it challenges those producers who want to grow their business in one way or another. Some dairies who expressed the desire to expand said they are unable to do so because of being landlocked or priced out of the land market. Other dairies, some small, said their size hurts them. One respondent shared, “We are small compared to the bigger dairies and most of the bigger ones are closer to the processing plants and vertically integrated, while we are not.”

Next Five Years
The next five years will bring significant measured change to the industry. Suppliers and dairy stakeholders can anticipate that dairy operations will continue to disperse. Likely these are the smallest operations by cow count; those that own little acreage and do not produce much of their own feed. Smaller operations that still report a willingness to change, by adding new revenue streams or expanding, are likely to stay in business. Economies of scale are evident in this report— as larger operations, those having multiple sites, owning more land and growing more of their own feed—are more likely to be profitable. And those that are more profitable are also more likely to grow and expand in the coming years.

Top challenges documented by dairies include a lack of succession planning, difficulty accessing permits, and challenges when it comes to accessing needed financing.

When it comes to advancing dairy operations, producers certainly have leaned forward into implementing technology to help drive their operation’s overall efficiencies over the past several years. And as producers look to the future, they remain confident that technology will continue to advance in helping their dairies. Between 24-32% of our surveyors shared that they tend to invest across at least five areas of technological focus in the coming years.

Profitability/Success
While there certainly is no cookie-cutter answer to what equates profitability and general success, our survey indicated that those that were more likely to be profitable were operations with:

· Large cow count, having 5,000+ head of cows.

· More likely to have 5+ sites in the operation.

· More likely to own 1,000 or more acres of land.

Conclusion
Farm Journal respondents not only recognized the mountain of challenges that our industry faces, but also embraced opportunities on the horizon that would help advance their dairies forward. An increasing number of dairies are looking to diversification, whether that be on-farm processing, beef-on-dairy, agritourism, crop production and income from renewable energy, to provide additional revenue streams to help with razor tight financial margins that many are currently experiencing.

Overall, dairies will continue to grow larger, diversify, grow their own feed or have access to purchase feed and lean into technology to not only help advance their business forward, but to provide longevity to push them to the next decade.

Click here to download the full 2024 Farm Journal State of the Dairy Industry Report
State of the Dairy Industry | Dairy Herd

Opportunities in the Dairy Industry: Insights from Top Dairy Leaders

Thu, 18 Jul 2024 13:31:12 GMT

Of course, the dairy industry has its share of challenges. But it is also an industry that is buzzing with optimism and opportunities. In fact, according to Farm Journal’s State of the Dairy Industry report, 43% of the respondents said they were very optimistic about the future of dairy. In a recent Farm Journal State of the Dairy Industry webinar, three leading dairy industry professionals shared their insights and perspectives about the biggest opportunities on the horizon for dairy producers.

Erica Maedke, vice president of Insights for Ever.Ag, encourages producers to pay close attention to the fundamentals of supply and demand.

“Dairy producers do a great job of making milk and we are finally moving into a period where we are going to have more capacity,” she explains. “So, in the short to medium term, we are going to see more buyers looking for milk supplies.”

Furthermore, Maedke shares that price volatility has helped the exports side of the equation, although she says that when price increases, the U.S. isn’t as competitive.

“We are very much spot players,” she says. “And we are not very competitive in making those long-term deals. So, we’re going to be in and out of this market back and forth.”

Stephen Cain, senior director of economic research and analysis with National Milk Producers Federation (NMPF), highlights that margins are getting better, especially compared to last year’s margins. He notes that inflations in terms of general demand have shown improvement.

“I think as we continue to see that inflation ease, that’ll loosen up some dollars here for consumers to spend some more money,” he says, noting he is bullish on export opportunities going forward.

Export Excitement
Cain is particularly optimistic about export opportunities going forward.

Michael Dykes, president and CEO with International Dairy Foods Association (IDFA), is not only upbeat about dairy, but he’s also extremely bullish.

“I think we have tremendous opportunity. We are a growth segment. We sometimes don’t focus on that in dairy, but we’ve had the last two years have been record consumption dairy products. Cheese is driving fast. Clearly yogurt and ice cream are doing well,” he says, noting that $8 billion is in the pipeline for dairy processing.

Dykes underscores the importance of exports, noting 40% of the increase in milk production in the last two decades has gone to the export market, primarily in the form of powders and cheese.

“Exports are going to be key for the U.S.,” he adds, emphasizing the role of global markets in sustaining U.S. dairy growth.

Innovation in Health and Wellness
Dykes and his colleagues at IDFA are also optimistic about the nutrition, health, and wellness sector.

“The general public wants to live longer; they want to live healthier lives. I think that opens up tremendous opportunities,” he says. Dykes believes innovation will play a crucial role in the future of dairy. Moving from traditional products to more specialized, fractionated milk products could unlock additional value. “I am a firm believer that there’s more value in fractions than we have capitalized on,” he explains.

To delve deeper into these insights and hear more about the challenges U.S. dairy producers face, listen to the full Farm Journal State of the Dairy Industry webinar at: Farm Country Update - Farm Journal

4 Reasons the Dairy Industry is Upbeat about the Future

Tue, 02 Jul 2024 18:17:20 GMT

Dairy producers have had some legitimate reasons to be glum about the state of the dairy industry. But that’s not the case for nearly half of the producers who participated in the recent 2024 State of the Dairy Industry survey, sponsored by Farm Journal.

Forty-three percent of the 210 respondents – producers whose cowherds range from 100 to 20,000 head – report they are “very optimistic” about the future of dairy.

Just as encouraging, the survey indicated nearly 70% of respondents had profits in the past five years, according to Karen Bohnert, editor and editorial director for Dairy Herd Management.

“And more than half of them plan to grow in the next five years, which is exciting news for the industry,” says Bohnert, who managed the survey process and reported on the results.

In a recent follow-up webinar, Bohnert asked three dairy industry leaders to share their perspectives on what they see as some of the best opportunities that lie ahead for the industry.

Here are four takeaways from their discussion:

1. While volatility will continue, the industry will see increased opportunity for profits, with export markets being key.

“I’m very bullish on dairy. We are a growth segment – a growth segment,” emphasizes Michael Dykes, president and CEO of the International Dairy Foods Association.

He points to several bright spots in the industry that have been underway for the past couple of years as proof.

“We’ve had record consumption of dairy products during that time,” he says. “Cheese is driving the bus clearly. Yogurt and ice cream are also doing well, though fluid milk (consumption) has been declining.”

Internationally, Dykes says the U.S. dairy industry has to stay focused on export markets as they are key to profitability.

“Forty percent of the increased milk production in the last 20 years has gone to the export markets, primarily in the form of powders and cheese,” he says. “So, trade is extremely important to us, and we’ve got to make sure we’re focused on that.”

Stephen Cain, with the National Milk Producers Federation, says he is bullish on export opportunities for the dairy industry in the long-term.

“We’ve had a little bit of a speed bump here in the last couple years with some issues with China, but in general the trend line is growth for our dairy products,” says Cain, senior director of economic research and analysis for the Federation.

“As we move forward the next five to 10 years, I think some of our competitors – the European Union and New Zealand – will be hard pressed to see significant milk growth. I think that opens up a tremendous opportunity for U.S. dairy producers to really fill the gap and fill demand globally,” Cain adds.

Erica Maedke, vice president at Ever.Ag Market Insights, says while the milk price is closer to class for 2024, next year she anticipates seeing a change with a lot of growth in capacity possible.

“It’s really the fundamentals of supply and demand,” she says. “Dairy producers do a great job of making milk, and we are finally moving into a period where we most likely will have more capacity than we really know how to handle. So, I think at least in the short run to the medium term, we are going to see more buyers looking for milk supplies.”

While Maedke believes there will be opportunity in exports, she does caution that she anticipates continued volatility and encourages producers to keep that in mind.

“We go through these waves. We’re going to be in and out of this market, and back and forth. But hopefully we’re seeing the floor lift when we see all this additional capacity,” she says.

2. The nutrition, health and wellness space will open more doors of opportunity for the dairy industry to enter.

“The general public wants to live longer, healthier lives, and I think that will provide tremendous possibilities for us with dairy protein,” Dykes says.

He believes that fractioning milk to better access its casein, whey protein and other properties will help the industry develop a variety of new products as well as improve existing ones.

“I am a firm believer that there’s more value in the fractions than what we have capitalized on so far,” Dykes says. “I also believe there are more beneficial fractions in a gallon of milk than we even know about. But we will identify those and find a way to monetize them, and we’ll find a way to contribute to a healthy lifestyle.”

3. As companies invest in developing more dairy products, that will increase the demand for access to more milk.

“In New York, there are five new dairy plants (in varying degrees of development),” Maedke says. “I think that will lift the northeast region of the U.S., as you consider ‘a high tide raises all ships.’ That will have spillover impacts to benefit folks in Vermont and Pennsylvania, as well.”

She also cites dairy product manufacturing expansions in Lubbock, Texas, and Dodge City, Kansas, as “huge positives” for the dairy industry.

While some of manufacturers’ needs for milk will be met by existing local supplies, that won’t be the case everywhere, she adds.

“Unfortunately, there will also likely be regionalization of some plants, some plants will close or move locations, looking for a better milk supply,” she says. “The Southwest is one region that’s just going to be tight on milk. But from a dairy producer’s perspective, there is hope for increased premiums as we look ahead for the next year or two.”

4. Dairy farmers are a resilient group and will respond to market opportunities and grow.

Dykes notes that some members of the dairy industry are concerned about any increases in market demand, because of the price and limited availability of heifers.

“If there’s a market demand for the milk, dairy operators will find a way to start producing more heifers; using sexed semen will be one way. The producers all work with rations, and they’ll figure out how to increase the milk production per cow,” he says. “I’m a believer that dairy farmers respond to the market signals. I’m a firm believer that dairy farmers will find a way to produce the milk that the market is calling for.”

Producers See Room for Improvement When It Comes to Processor Relationships

Mon, 24 Jun 2024 12:52:12 GMT

One vital ingredient for establishing a solid processor – producer relationship is communication. In fact, fluid dialogue between the two is what is needed, especially as dairies grow more sophisticated. Producers truly need to fully understand more than just what happens to their milk once it leaves the farm.

Ed Gallegher, president of Dairy Farmers of America (DFA) Risk Management program, also adds the need for producers to have a strong relationship with someone who can talk about milk price risk and food price risks that are in the marketplace.

“It’s an important aspect to focus on,” he says.

The world pandemic shined a light on this subject, as many dairies were forced to dump their milk. Stories have unraveled of farms losing their milk market overnight. And these dairies know trying to find a processor is easier said than done. Now, as we await a new Farm Bill, it appears that nearly every group tied to dairy has an opinion on the Federal Milk Market Order (FMMO) reform debate.

So, despite billions of dollars in the pipeline for future processing capacity, it was not a big surprise that nearly a third of our survey respondents cited processors and market confidence as one major challenge impacting their ability to expand and grow.

In fact, one evaluator shared, “We just left a milk cooperative that had drastically increased a marketing fee and milk hauling rate over the past two years.”

Near-Term Hurdles

Ten percent of respondents shared that inadequate capacity for processing as a near-term hurdle with one surveyor sharing, “It’s hard to find a milk buyer for a dairy of my size, so I have to plan to wind down operations or change to a different type of farming as I approach retirement.”

New York dairy farmer, Tyler Reynolds, shared with Dairy Herd Management that the more honest producers are with the processors on their future hopes and desires, is a win for all.

“Processors need to plan, too,” Reynolds, who owns Reyncrest Farms, home to 1,400 cows near Buffalo, says.

Roughly half of dairy operators that responded to the survey are not terribly confident in their processor relationship. When asked about their confidence in the future of their existing milk market, the overall response was softer yet.

However, 70% of respondents believed the dairy industry has future opportunities when it comes to innovation and processing. Overall, most operators shared they are not looking to vertically integrate as an avenue to generate market stability.

Download Farm Journal State of the Dairy Industry Report here:

State of the Dairy Industry | Dairy Herd

Where is the Milk Actually Coming From? Herd Sizes And Locations See Big Change

Sun, 23 Jun 2024 19:32:55 GMT

Editor’s Note: This is one article in a series that is included in the 2024 Farm Journal’s State of the Dairy Industry report. The full 16-page report will appear in the May/June issues of Dairy Herd Management and Milk Business Quarterly and will be published in this space over the next several weeks. To download the full report for free click here.

Earlier this year, the USDA National Agricultural Statistics Service released the latest Census of Agriculture data. And without much surprise, the results showcased two main themes – more milk and more consolidation.

Over the span of a decade, the U.S. produced 25.3 billion lbs. more milk in 2023 than in 2013, all while keeping cow numbers relatively unchanged. However, where these animals lived and what size operations they resided on did see a significant change.

According to Lucas Fuess, senior dairy analyst at Rabobank, only 16 of the top 24 milk-producing states increased milk production within the last 10 years. States who experienced a decline included:

California
Florida
Illinois
New Mexico
Pennsylvania
Vermont
Virginia
Washington

In contrast, states such as Texas, Wisconsin and Idaho saw significant growth, with Michigan, New York and South Dakota trailing not far behind.

“By a wide margin, the largest growth occurred in Texas, producing an additional 7 billion lbs. of milk from 195,000 more cows versus 10 years ago,” Fuess says. “New processing capacity, mainly in the Panhandle region, in a state welcoming to the industry drove the strong growth in Texas.”

The size of the farm that the majority of today’s herd lives on also saw a significant change.

According to Fuess, dairy operations with less than 500 cows makeup 80% of the nation’s dairy farms. However, the majority of cows within the nation’s herd reside on farms with 1,000 animals or more . The Census of Agriculture provides the following breakdown:

Percent of U.S. dairy herd residing on farms with more than 1,000 cows.

1997 – 17%
2007 – 40%
2017 – 55%
2022 – 65%

“In the future, it is likely that more cows will move to larger farms, which are able to produce milk at a lower cost versus smaller operations. Growth in the number of larger herds will persist, but smaller farms will continue to exist in sizable numbers, especially those practicing diversified agriculture and those that have kept debt levels low,” Fuess says.

Why There's a Big Call For Dollars and Direction in Dairy

Fri, 21 Jun 2024 21:36:43 GMT

Climate-smart agriculture has a long way to go, despite the billions of dollars being committed. In October, Secretary of Agriculture, Tom Vilsack, stated at the International Dairy Forum (IDF) World Dairy Summit Chicago, Ill., that he believes climate-smart agriculture creates an enormous opportunity, sharing that U.S. farmers want a system that is both voluntary and incentive-based.

“Obviously at the top of the list is the impact of climate,” he said in front of an international crowd from more than 50 countries. “The impact it is having on our ability to produce more, and the challenges climate presents in making sure we remain productive as our world population increases.”

According to a recent U.S. Agriculture Department study, only 3% of farmers are using available carbon credit programs that pay them to remove carbon dioxide from the air and sequester it in the soil, in part because of limited return on investment and high transaction costs.

Vilsack outlined that everyone in the dairy industry needs to work collaboratively—from the farmers, environmental groups and conservations groups, to major food companies, retailers and universities. The effort starts with a $3 billion commitment from the USDA with funding extended to 141 projects, including 18 dairy projects.

Check Out the full Farm Journal State of the Dairy Industry Report: State of the Dairy Industry | Dairy Herd

And, if there is one clear area or need among the dairies that participated in Farm Journal’s dairy research project, it’s that of enhancing on-farm stewardship activities. In five of seven areas probed, the majority of respondents cite a need for additional stewardship resources. Only in animal welfare and manure/nutrient management do they feel well-resourced. More than half of operators say they need resources to shore up public perception, manage noise/traffic/dust, support water quality, measure and report on air quality, and measure and report on GHG.

A large percentage of dairies anticipate a need for accelerated resources and support across stewardship initiatives in the coming years. Noticeably, most lack resources for GHG and air quality metrics. Water stewardship, noise, traffic, dust and public opinion are in better shape, but half of dairies still lack adequate resources. Dairies are much further along in managing manure, nutrients and animal health—but more than a quarter still need help.

In fact, 86% of respondents felt the dairy industry will see greater pressure to lower environmental impact. This is being echoed by all players in the U.S. dairy industry, to become carbon neutral by 2050.

The Next Generation Is Working To Secure The Farm

Tue, 11 Jun 2024 17:42:06 GMT

Georgia dairy farmer, Pete Gelber, who owns and operates Barrington Dairies in Montezuma,Ga., home to more than 13,500 cows, says as producers age, they must be willing to look in the mirror and ask tough questions, including what they want to happen to their farm and what’s in the best interest of all involved.

According to Shannon Ferrell, agricultural economics associate professor at Oklahoma State University, 88% of farmers and ranchers have no form of retirement plan.

“If you plan for another generation to come back to the farm, then you are going to have to determine how to financially support that,” he says. “Remember, if you choose not to do anything, that is a strategy that has a zero percent chance of working.”

With razor thin margins and an overall lackluster dairy market, it was not surprising when the majority of the respondents to our survey said they either lack succession planning or plan to maintain their current structure going forward. The overall concern as to how to pass the baton from one generation to the next is real, as 46% of respondents stated they do not have a succession plan or are unaware of the operations plans.

When you take a deeper dive, the larger-sized dairies tend to have a plan in place or are looking at succession planning. For dairies with 5,000+ cows, 42% of them say they have a plan in place, and 32% are in the stage of developing a plan. Findings are similar to dairies with 1,000 to 4,999 cows.

The small-sized dairies surveyed illustrated they are the least likely to have a plan in place, while dairies that plan to grow or expand are more likely to have a current structure plan in place.

The majority of respondents of all herd sizes said they plan to add a family member or bring a partner into their dairy in the next five years.

Even the most efficient and profitable herds need a transition plan from one generation to the next. Without it, they can disperse and become a statistic.

Succession plans don’t happen overnight. Begin conversation today about what your hopes are for the farm and work with a consultant on how to proceed forward with a plan to pass the farm onto the next generation or partner.

Dairy's Future: What's Actually on the Horizon?

Thu, 06 Jun 2024 15:54:36 GMT

The dairy industry has certainly changed from the era of handmilking cows one-by-one. In the past decade alone, change has come at lightning speed. From technology adoption and increasing efficiencies to overcoming challenges that seem to come at a rapid pace, dairy producers have rolled up their sleeves and leaned forward to embrace opportunities to advance their farms.

Today, the industry has a growth mindset, shared Michael Dykes, CEO of International Dairy Foods Association (IDFA), at the Dairy Forum in Phoenix earlier this year.

“Our farmers want to grow, and so do our processors. If we aren’t growing, if we aren’t looking toward the future, we’re going to get surpassed by others,” he says.

Sixty percent of processing executives have expressed optimism for 2024, Dykes adds, and 73% plan to increase their investments over the next three to five years.

Phil Plourd, president of Ever.Ag Insights, offers a different perspective. According to his back-of-the-envelope math, today’s interest costs on building a 6,000-cow dairy are running about 60¢ per hundredweight more than 2021 levels. Plourd says it could limit producer’s appetites for expansion.

In recent years, the footprint of the industry has also changed, most notably the migration of dairy herds from coastal areas inland. For example, growth is skyrocketing in South Dakota. In January 2024, USDA said the number of dairy cows in South Dakota totaled 208,000, up 70.5% since 2019. To put that into perspective, the state’s dairy herd has added 118,000 cows in the past 12 years.

On the farm front, lackluster mailbox prices so far in 2024 are forcing dairy producers to find a way to keep their legs beneath them. Still, many producers across the county have their eyes open to the future and are eagerly embracing opportunities to grow any way they can.

The largest U.S. dairy cooperative, Dairy Farmers of America (DFA), conducted a member-survey that found by 2030 they will have only 5,100 member farms. That’s a drastic drop from their current membership numbers, says Corey Gillins, chief milk marketing officer with DFA.

More and More Dairies Diversify to Survive

Tue, 04 Jun 2024 20:42:12 GMT

With the current economy producing low milk prices and consequently little to no income, more and more dairies are exploring options to add alternative profit sources to cushion their bottom line.

According to Marin Bozic, assistant professor in dairy foods marketing economics at the University of Minnesota, many traditional dairy farms, whose incomes were based almost exclusively on milk and meat, will expand to enterprises with a multitude of revenue streams.

“We already are seeing elements of this conversion on some farms, and innovation will allow more to follow,” he says.

We asked surveyors what avenues they are exploring to generate added profit to help with their farm’s overall profitability, and the results showed that branded beef and agritourism are leading the way. The results also illustrated that just 18% of respondents currently capture revenue from on-farm milk bottling, cheesemaking, or ice cream production. All told, a substantial portion of producers do plan to begin these activities, with a fourth of respondents’ sharing they are aiming to add branded beef in the coming years.

With super strong beef markets, it is no surprise that nearly 60% of respondents say they are currently breeding dairy cattle to beef. Diversification appears to be an essential ingredient to the modern dairy. Of all the respondents, only 20% designated their operation as dairy-only, while others described their operations by including growing crops and using beef for revenue.

Interestingly enough, dairies with beef-on-dairy operations are more likely than dairy-only operations to say they are planning to grow or expand in some way.

Jacob Larson of Larson Dairy in Florida, says as the next generation of Larsons return to the family’s 5,500-cow dairy, they’ll have to explore what makes economic sense.

“The level of return on investment in this industry is tough,” he says. “The next generation is going to need some clues as to whether this is a good return for the investment or not.”

Dairy Farmers are on the Hunt for Technology

Thu, 30 May 2024 23:39:24 GMT

More and more dairies are looking to technology to help dial in on efficiencies and help spell future success of their operations.

Between 24% to 32% of our surveyors said they tend to invest across at least five areas of technological focus in the coming years.

The 2023 Milk Business Leader in Technology award winner, Chris Szydel with Pagel’s Ponderosa in Kewaunee, Wis., says that with so much technology to choose from, ultimately what he selects is cost-effective equipment that will improve the overall efficiency of the dairy.

Kansas producer, Ken McCarty with McCarty Family Dairy, has two rotaries that include a whole host of technologies and says they are looking at investing in additional robotics on their farms to reduce labor.

“Anything that we can do that standardizes practices on the farm, drives down labor costs and can benefit the welfare of our team members is worth pursuing,” he says.