Fewer farms, more milk: U.S. dairy consolidation accelerates
By Karen Bohnert, Dairy Herd Management
The U.S. dairy industry is on track to fall below 20,000 farms by the end of the decade, according to a new analysis by agricultural research firm Terrain.
Since 1992, the country has lost more than 100,000 dairy operations, yet total milk production has increased by more than 50 percent as larger farms have become increasingly efficient.
“By the end of the decade, I expect there to be fewer than 20,000 dairy farms in the U.S.,” says Ben Laine, Terrain’s senior dairy analyst and author of the report. “In the near term, the combination of aging farmers and high cattle prices could accelerate exits.”
The report argues that the economics of scale increasingly favor large operations, which can spread fixed costs, invest in automation and genetics, and weather market fluctuations more effectively than smaller competitors.
As production becomes concentrated among fewer producers, milk supply is expected to become less responsive to price signals, potentially leading to longer and more volatile market cycles. The report also points to growing vertical integration, with large dairies investing directly in processing, further concentrating control over the supply chain.
