What the changing structure of dairy farming means for the industry’s future
For more than 30 years, dairy farm composition in the United States has steadily shifted toward farms with larger herds.
Take a look at the changes in the composition by number of milk cows per farm for the seven most recent USDA Agricultural Censuses.
**The highest bracket in the 1987 census was >499
Looking deeper at the numbers
While only farms with 500 or greater cows have continued to grow in number since 1987, approximately 74% of farms with milk cows still consist of fewer than 100 cows. And while total farm operations with milk cows decreased approximately 72% in the last three decades, the average cows per farm increased 250% in that time from 50 milk cows per farm to 250 milk cows per farm. Even more surprising is the size of the midpoint herd. That’s a number that splits cows in half: meaning that half of all cows are on a farm with more milk cows than the midpoint while the other half of cows are on a farm with less milk cows than the midpoint. The herd midpoint increased 1,525% between 1987 and 2017 from 80 milk cows to 1,300 milk cows. (See Figure 2)
What do the numbers tell us? The future is in flux
The western U.S. is known for its large farm operations – and large operations have had continued growth in recent years, through organic growth and new operations. The larger farms continue to get larger - and cows on larger farms typically have a higher yield per cow, lower costs per CWT, and therefore, better returns. Smaller farms continue to exit the market for a variety of reasons, including milk price volatility and price volatility of various inputs. Additionally, milk markets can be more difficult to find, with the decreasing consumption of the fluid milk segment resulting in plant closures across the country.
Overall, the shift in structure shows no sign of stopping. Larger farms continue to get larger and smaller dairy farmers are exiting the market due to lack of profitability. While the U.S. government has implemented a margin protection program to help farmers hedge against the volatility in milk and feed prices, time will tell how successful this program will be. In the meantime, the industry continues to work on innovation to combat the market share loss from plant-based alternatives and other substitutes.
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