USDA’s Economic Research Service (ERS) recently did a deep dive into the US dairy industry and the significant changes it has undergone over the past two decades. One of the biggest takeaways from the research is that while US dairy farm numbers have decreased significantly, milk production has increased thanks to advances in technologies and production systems.
From 2003 to 2023, U.S. milk production increased from 170.3 billion pounds to 226.4 billion pounds, an increase of +33% over the two decades. The number of dairy herds licensed to sell milk, however, declined from 70,375 in 2003 to 26,290 in 2023, or -63%. The report’s authors note that the increase in milk production and decrease in the number of dairy herds are consistent with progressively larger farms and increased milk cow productivity over the period. The average number of pounds of milk produced per cow per year by U.S. dairy cows increased from 18,759 in 2003 to 24,117 in 2023, an increase of +29 %.
During the 21-year period from 2002-2022, of the six dairy farm size categories that USDA uses, dairy farm numbers declined in farms with sizes of 1–49 cows (-79%), 50–99 cows (-76%), 100–199 cows (-62%), 200–499 cows (-19%), and 500–999 cows (-13%). In contrast, the number of dairy farms with 1,000 or more cows increased by +60%.
The State with the largest increase in milk production was Texas, which increased its share of total US milk output from 3% to 7%. Idaho followed, increasing its production share by +2 percentage points to 7% of production. On the other hand, States that were not included in the top 10 milk producing States decreased production share by -3 percentage points, from 29% to 26%. Idaho, Texas, and New Mexico each had more than 70% of their milk sales from farms with 2,500 cows or more. In contrast, Wisconsin, Minnesota, and Pennsylvania each had more than 60%t of their milk sales from farms with fewer than 1,000 cows.
Operation sizes overall increased from 2000-2021, with the average surveyed farm having 283 cows in 2021, compared with 112 cows in 2000, a +153% increase. The number of average dairy farm acres operated (which includes the land on which the dairy and all other farm enterprises are located) also consistently trended upward, from 372 acres in 2000 to 483 acres in 2022, a +30% increase. The authors highlight that the percentage increase in milk cows was higher than the percentage increase in farm acres operated
As for costs and returns, the report shows feed expenses were covered by the average dairy farm in all years during the 2000-2022 period. Total operating costs (which include feed) were covered by the average dairy farm in all but 2 years, 2009 and 2012. Total operating and ownership costs were covered by the average dairy farm in about half of the years. Finally, total economic costs were covered by the average dairy farm in only 2 years, 2007 and 2014, from 2000 to 2022. Keep in mind, costs and returns presented in the USDA, ERS Commodity CAR data do not include Government payments or costs associated with Government programs.
Larger dairies generally received a higher percentage of their total value of farm production from the dairy enterprise. Farms with at least 500 cows received, on average, 90% or more of their total farm value of production from the dairy enterprise, while farm size categories with fewer than 500 cows averaged at most 82% of their total farm value of production from milk. Differences in the percentage of farms producing specific crops by size category were found, with the most notable difference being the lower percentage of larger dairies producing hay. Lower hay production among larger dairy farms was consistent with lower homegrown harvested feed costs per 100 pounds of milk sold among larger dairy farms. The full report is available HERE. (Source: Gillespie, J., Njuki, E., & Teran, A. (2024). Structure, costs, and technology used on U.S. dairy farms (Report No. ERR-334). U.S. Department of Agriculture, Economic Research Service)
