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Archive for Milk price

December’s 6ppl Cut Exposes UK Dairy’s Reality: Why 800 Farms Face Impossible Math While Processors Invest Billions

Monday, November 3rd, 2025

Farmer loses £17k/month. Processor makes £20.5M/year. December’s 6ppl cut forces UK dairy to its moment of truth. Math doesn’t lie.

Editorial Note (Updated November 10, 2025): Following feedback from AHDB, we have updated this article to clarify data sources and correct a attribution error. Where data was previously attributed to AHDB without verification, we have now cited the correct sources or clarified these as industry estimates. Production cost figures vary significantly by source, region, and methodology—we’ve added context to reflect this complexity. We value accuracy and transparency in our reporting and welcome continued dialogue about UK dairy economics.

Executive Summary: Jack Emery asked the BBC if it’s worth getting up at 4 AM anymore—a question now haunting 7,040 UK dairy farms facing £17,000 monthly losses from December’s 6ppl cut. Meanwhile, processors post record profits: First Milk’s £20.5M is called “exceptional.” With farmgate prices at 35.85ppl against estimated 49p/liter production costs (based on industry benchmarking), the math has become impossible. Five strategic paths exist—organic conversion, scaling up, diversification, cooperation, or exit—but most demand capital and time that hemorrhaging farms simply don’t have. Irish farmers reversed similar cuts in 47 days through cooperative ownership; the UK’s different structure blocks that option. The next 90 days determine whether UK dairy finds an unprecedented collective response or accelerates toward just 4,200 farms by 2030, down from today’s 7,040. Behind every statistic, farm families face math that doesn’t work anymore—in an industry where suicide rates already run 3.5 times the national average.

You know that feeling when you open a letter you’ve been dreading? That’s what Jack Emery was describing to the BBC last month. He runs Thistle Ridge Farm down in Hampshire—about 5,000 liters daily, same as a lot of operations I talk with. When he calculated that First Milk’s 6 pence cut means over £100,000 gone from his annual revenue, then asked whether it’s even worth getting up at 4 AM anymore… well, that resonated with pretty much everyone I’ve spoken to since.

The revealing part is how December’s announcement is forcing us to confront something we’ve been dancing around for years. After digging through processor reports, talking with farmers from Scotland to Devon, and watching what happened with those Irish producers in September—I’m convinced we’re seeing the whole structure of UK dairy that’s evolved since the Marketing Board ended in ’94 finally showing which farms have a path forward and which ones honestly don’t.

The Numbers We’re All Running

So let’s talk about the math that’s keeping everyone up at night—because I know you’re doing the same calculations I am. First Milk announced a price of 35.85 pence per liter, effective December 1st, including the member premium. Müller’s Advantage program drops to 40ppl. Arla sits at 42.71ppl from November.

Now, industry benchmarking from various sources suggests average production costs running 48-50 pence per liter, though these figures vary significantly by region and farm type. While AHDB provides valuable market data, comprehensive production cost averages come from multiple sources including Kingshay’s annual Dairy Costings Focus report and regional farm business surveys. That matches what I’m seeing in actual farm accounts, though, as a couple of Scottish producers reminded me recently, if you’re dealing with Highland transport or you’re way off the main tanker routes, add another 2-3ppl just for getting milk to market. Down in Wales, First Milk’s members in Pembrokeshire face similar transport premiums. And operations in Cornwall? They’re looking at some of the highest logistics costs in the country.

Here’s where it gets rough. At First Milk’s 35.85ppl against estimated production costs around 49p (based on industry benchmarking and producer interviews, not a single national average), you’re potentially losing about £13 per liter. For a modeled 250-cow operation doing 1.6 million liters annually—that could mean monthly losses approaching £17,000. This is an illustrative calculation based on reported cost ranges—individual farm economics vary significantly. Not sustainable. Not even close.

The structural challenge of UK dairy economics: Based on industry benchmarking, processors pay farmers significantly below estimated production costs of 48-50ppl, with First Milk’s 35.85ppl potentially creating substantial monthly losses for typical 250-cow operations. This represents systematic market pressure rather than temporary adjustment.

The timing couldn’t be worse. We all lived through this spring’s drought—the Met Office confirmed it was the driest of the century. I was talking with Cumbria farmers who’d already fed a third of their winter silage by August. Down in Somerset, a 180-cow producer I know went through 40% of his reserves. Now they’re buying concentrate feed at £310-340 per tonne for dairy compounds, according to recent market reports, though forage costs vary widely—AHDB reports large bale hay averaging around £120 per tonne. The combined impact of both concentrate and forage costs, while milk checks are about to drop by thousands monthly, creates severe pressure.

Jack Emery mentioned there’s a two-million-liter surplus in the UK. What he didn’t say—but we all know—is that surplus happened because UK production jumped over 6% this year just as global commodity markets started sliding. Classic timing, right?

What Processors Aren’t Telling Us

You know what makes these cuts particularly hard to swallow? First Milk just reported their best year ever. Turnover up 20% to £570 million. Operating profit is hitting £20.5 million. CEO Shelagh Hancock called it “exceptional” in their August report.

The great dairy wealth transfer: First Milk’s ‘exceptional’ £20.5M profit represents systematic extraction from 700 members now facing collective £146M annual losses. When processors profit while suppliers fail, this isn’t market forces—it’s market power abuse worthy of regulatory scrutiny.

So I spent time really understanding processor economics, and what I found is enlightening. Sure, First Milk reports a 3.6% operating margin—doesn’t sound like much. But that number masks what’s actually happening between the farmgate and the final sale.

When processors buy our milk at 35.85ppl, they’re getting basic commodity input. But look what they’re producing—First Milk’s got commodity cheddar going to Ornua, yes, but they’re also making whey protein concentrates that command serious premiums. They’ve got specialty products through BV Dairy, which they bought in February. And their Golden Hooves regenerative cheddar? That’s capturing 50-75% premiums according to their sustainability reporting.

The company line is that commodity markets weakened—AHDB wholesale data shows butter fell £860 per tonne and cheese dropped £310 per tonne between specific trading periods in late summer/autumn—so they need competitive pricing to maintain market access. Note these are short-term price movements, not necessarily indicative of longer trends. We attempted to reach First Milk for additional comment, but received no response by publication.

What really tells the story is where they’re putting their money. Arla announced £179 million for Taw Valley mozzarella capacity in July. Müller’s investing £45 million at Skelmersdale for powder and ingredients. These aren’t maintenance projects—they’re building capacity for global markets that bypass UK retail’s stranglehold on liquid milk.

Kite Consulting’s September 2025 report “Decoding Dairy Disruption” lays it out pretty clearly—processors can achieve much higher margins on specific product lines while reporting modest overall margins. That BV Dairy acquisition is particularly clever… it lets First Milk redirect commodity milk into specialty channels while still pricing our milk based on bulk markets.

Here’s the thing that stands out: this situation isn’t unique to the UK. In New Zealand, Fonterra’s dealing with similar processor-farmer tensions, while U.S. dairy continues its decades-long consolidation, with operations above 5,000 cows becoming the norm rather than the exception. The difference? Those markets have different support structures and scale economics.

Why Ireland’s Success Won’t Work Here

In September, 600 Irish dairy farmers organized through WhatsApp and reversed Dairygold’s price cuts within 47 days. The Irish Farmers Journal covered it extensively, and I’ve had plenty of UK farmers asking, ‘Why can’t we do that?’

It’s not about courage or determination. It’s about structure, and this is crucial to understand.


Factor		Ireland: DairygoldUK: First Milk
Ownership StructureTrue cooperative — farmers own equityCorporate co-op with professional management
Farmer PowerDirect voting rights, board controlLimited influence, no true ownership
Member Base~3,000+ farmer-shareholders~700 members (supplier relationship)
Reversal Timeline47 days via WhatsApp coordinationNO ACTION after 30+ days
Legal FrameworkEstablished Cooperative Society ActNew Fair Dealing Obligations (July 2025—untested)
Organizational Cost£0 (infrastructure existed)£10k+ legal fees + 6 months coordination
Key DifferenceSHAREHOLDERS with legal powerSUPPLIERS with petition power

When those Irish farmers confronted Dairygold management at Mitchelstown, they weren’t suppliers asking for mercy—they were shareholders demanding accountability from a company they legally own. Dairygold, like most Irish processors, operates as a true farmer cooperative, with members holding actual equity and voting rights. The Irish Co-operative Organization Society shows it has 130 enterprises structured this way.

Compare that to us. First Milk claims cooperative status with about 700 members, but check their Companies House filings—it operates more like a traditional company with professional management. Arla UK? We’ve got 2,300 British farmer-owners, but we’re a minority within a 9,500+ member European cooperative historically dominated by Danish and Swedish interests.

Several First Milk members in Scotland and northern England have pointed this out to me: we’ve had the same Fair Dealing Obligations regulations for forming Producer Organizations since July. Same legal framework as Ireland. But forming a PO requires lawyers, coordination, months of work—all while you’re hemorrhaging money and working 90-hour weeks. The Irish? They just activated what already existed.

Five Options—And Why Most Won’t Work

Industry advisors keep presenting these strategic options. After examining each through actual farm finances and talking with producers trying different approaches, let me share what’s actually realistic.

Premium differentiation sounds great at conferences. Organic and regenerative systems can capture the 50-75% premiums reported by the Soil Association. First Milk’s got their Golden Hooves programme. But here’s what nobody mentions: organic conversion takes 3 years at zero premium, while you’re paying 20-30% higher costs, according to the Organic Milk Suppliers Cooperative. Capital requirement? Based on SAC Consulting and Promar International estimates, organic conversion for a 250-cow operation typically requires £500,000-750,000, though it varies by system. Timeline to positive returns? Five to seven years minimum.

Let’s be realistic… show me a farmer losing £17,000 monthly who has half a million pounds and seven years to wait.

The strategic impossibility matrix: Based on modeled calculations showing potential £17,000 monthly losses, typical UK dairy farms face a brutal reality—five of six strategic options require capital and timelines that lie beyond survival horizons. Only strategic exit sits in the viable zone, preserving £300-400k equity before forced liquidation eliminates it. This isn’t pessimism—it’s mathematical reality driving 40% toward exit by 2030.

Scaling for efficiency absolutely works—if you’ve got millions. Industry consultancy benchmarking and international case studies suggest operations over 3,500 cows achieve much lower per-unit costs. But expanding from 250 to 3,500 cows? You’re looking at £26-39 million at current development costs of £8,000-12,000 per cow. Banks want 18 months of positive cashflow before discussing expansion. Current trajectory? Negative £17,000 monthly.

Strategic diversification offers possibilities, but timeline matters. UK Agricultural Finance research shows that glamping units cost £15,000-30,000 each and take 12-18 months to develop, including planning. On-farm processing? That’s £50,000-100,000 minimum plus all the Food Standards Agency requirements. Solar installations take 18-24 months from agreement to the first payment. These might help in the long term, but December’s cash flow crisis needs immediate solutions.

Cooperative formation could theoretically work. The Fair Dealing Obligations regulations, effective in July, provide the framework for Producer Organizations. But NFU Legal Services estimates £5,000-15,000 just for setup, plus coordination and months of organizing. I know of attempts in northern England that stalled because farmers simply didn’t have bandwidth while managing daily crises.

Strategic exit—nobody wants to discuss this, but it’s increasingly the only rational choice for some. A 250-cow operation might extract £300,000-400,000 in equity through planned liquidation now, based on current values. Wait until forced insolvency? That equity evaporates. Solar leases generate £800-1,200 per acre annually according to Solar Energy UK. Environmental schemes offer £200-400 per hectare under Countryside Stewardship. The math is harsh but clear.

What the Next 90 Days Will Tell Us

Key Dates to Watch:

  • December 1: First Milk price cut takes effect
  • January 15: Deadline for meaningful PO formation activity
  • Late January: Processor pricing announcements for February
  • March: AHDB quarterly producer numbers released
Mark your calendar—these six dates determine everything: From December’s price cut through March’s revealing producer numbers, this 90-day window will expose whether UK dairy mounts unprecedented collective resistance or accelerates toward 40% farm losses by 2030. Watch cull volumes (liquation signal), PO registrations (organization capacity), and Q1 exits (acceleration confirmation)—The Bullvine will track each milestone.

December through February’s going to be critical. Looking at historical patterns and current dynamics, here are the indicators I’m watching:

Producer Organization registrations with DEFRA—if farmers are organizing, we should see applications by mid-January. The public registry’s accessible, and as of early November, there’s been nothing significant since October’s announcements.

Cull cow markets are telling. AHDB data shows volumes typically rise 10-15% in winter normally. While some regional auctioneers report elevated activity, AHDB’s national data through early November does not show significant increases above seasonal averages. December data will tell the full story of whether localized reports translate to national trends.

January processor pricing will signal direction. If First Milk, Müller, and Arla maintain or cut further, they’ve calculated that we lack the capacity to respond. Movement toward 40-42ppl might suggest they see organizational stirrings worth heading off.

The Agricultural Supply Chain Adjudicator can impose penalties of up to £30 million under the 2024 regulations. Their annual report shows that UK dairy receives maybe 1 or 2 complaints per year from 7,000+ producers. If that doesn’t change by February despite this crisis… well, it confirms we’re too stretched to fight.

Come March, AHDB publishes Q1 producer numbers. If exits accelerate beyond 190 farms annually toward 240-320, December becomes an inflection point—just not the kind we’d hope for.

Family dairy farming’s extinction timeline: If December’s price cuts trigger projected exit rates, UK dairy contracts from 7,040 to 4,200 operations by 2030—a 40% industry wipeout in five years. Each data point represents 450+ farm families facing impossible decisions, with 2029-2030 showing crisis acceleration as remaining farms hit breaking point.

The Human Side Nobody Talks About

What statistics miss is what’s happening in farm kitchens right now. The Farm Safety Foundation’s research shows farmers are 3.5 times more likely to die by suicide than the general population. But that’s not just a number—it’s about identity.

When you’re third-generation dairy, when your kids show calves at county shows, when your whole sense of self is wrapped in being a good farmer—losing the farm isn’t just business failure. A study in the Journal of Rural Mental Health found that farmers couldn’t separate their personal identity from their farm identity. When the farm failed, they felt they’d failed as humans.

The University of Guelph’s agricultural mental health research documents the progression. First comes problem-solving—cutting costs, deferring maintenance, and longer hours. Then isolation. Farmers stop attending meetings, skip social events, and withdraw. When cognitive distortions take hold—every option looks impossible, exit feels like complete failure—intervention becomes critical.

I’ve noticed that December’s cuts aren’t hitting farmers in isolation. They’re hitting operations already stressed by drought, inflation, and the watching of neighbors exit. For someone already questioning whether it’s worth continuing, that £600 monthly loss can accelerate a psychological crisis dramatically.

What Success Actually Looks Like

Not every story ends in exit, and that’s important to remember. I’ve been talking with operations, finding ways through this that deserve attention.

One farm in Cheshire I visited started transitioning to artisan cheese three years ago—began at local farmers’ markets and now supplies regional delis. Over those three years, they invested about £85,000 total, but they’re now achieving £1.20-1.40 per liter equivalent on cheese versus 36p farmgate. The key was starting small, reinvesting profits, and growing gradually.

Five farms near Dumfries formed an informal buying group last year—nothing fancy, just neighbors coordinating feed orders through WhatsApp for 8-12% better pricing. As the organizer told me, “We can’t control milk prices, but we can optimize what we spend.”

Several farms moved into contract heifer rearing, maintaining dairy expertise while reducing capital requirements and price exposure. Margins are lower—typically £350-400 per heifer based on current arrangements—but it’s predictable income with less stress. One farmer who made the switch two years ago told me simply: “I sleep at night now. Can’t put a price on that.”

What’s encouraging is that these aren’t following standard strategic paths exactly—they’re hybrid approaches that match specific circumstances, available capital, and family goals.

Where This Is Probably Heading

Looking at current industry exit patterns and talking with dairy economists at Harper Adams and Reading… if trends continue, UK dairy by 2030 would likely have 4,200-4,800 operations, down from today’s 7,040. Average herds approaching 300-350 cows. The middle tier—150-400 cow operations—is largely disappearing, replaced by either large-scale operations or small niche producers.

This doesn’t necessarily mean milk shortage. The UK will maintain production, keep shelves stocked, and meet demand. But through a fundamentally different structure than even five years ago.

What December represents isn’t the breaking point—it’s more like the revelation point. When we can’t pretend anymore that working harder, cutting costs, or waiting for recovery will save operations that are structurally challenged in this system.

Practical Guidance for Right Now

If you’re looking at impossible math, here’s what I’d suggest based on conversations with advisors and farmers who’ve navigated this:

First, calculate the true break-even point, including family living. Not just production costs—everything, including realistic family drawings. If that’s above 45 ppl, act immediately rather than hope for recovery.

Second, assess a realistic timeline. How many months can you sustain current losses? Not theoretical credit or hoped-for recovery—actual reserves against actual losses. Most operations I’ve analyzed have lasted no more than 3 to 6 months.

Third, if considering exit, move quickly. Asset values are highest in planned liquidation, not in forced sales—any auctioneer will confirm this. Farms exiting in 2026 will find stronger January markets than June.

Fourth, if staying, commit fully. Half-measures don’t work now. Whether diversification, scale, or differentiation, successful transitions require complete commitment and adequate capital. Without both… it might be time to reconsider.

Finally—and this really matters—remember this isn’t personal failure. The UK dairy’s structure creates these outcomes. You didn’t fail. You’re operating in a system where structural forces favor consolidation, and margin capture happens downstream. Understanding that won’t change outcomes, but it matters for how you frame what comes next.

Support When You Need It

For those struggling with these decisions, support exists. RABI’s 24-hour helpline (0800 188 4444) offers confidential assistance from counselors who understand farming. The Farming Community Network (03000 111 999) provides practical and emotional support from staff with agricultural experience. Rural Support combines business planning with mental health resources.

These aren’t just numbers—they’re staffed by people who understand losing a farm isn’t just losing business. It’s losing identity, legacy, purpose. No shame in needing support through that.

The Bottom Line

December’s 6ppl cut isn’t really about December. It’s about whether the UK dairy’s structure can sustain family-scale farming or whether consolidation toward fewer, larger operations is simply inevitable. Looking at processor investments, organizational challenges, and the mathematics… the direction seems increasingly clear.

Yet within that larger story, individual farmers are writing their own chapters. Some will find innovative adaptations. Others will make dignified exits, preserving family wealth for different futures. Maybe some will catalyze collective action that could still influence the narrative.

What matters now isn’t predicting which unfolds—it’s ensuring farmers have clear, honest information for family decisions. Because behind every statistic, market report, price announcement, there’s a family at their kitchen table, doing math that doesn’t work anymore, trying to figure out what comes next.

That’s the real story for December 2025. Not the 6ppl cut itself, but what it reveals about who has options and who’s running out of time.

A Note on Data Sources UK dairy production costs vary significantly based on source, methodology, and sample. This article draws from multiple sources including:
• Industry benchmarking reports (Kingshay, Promar, SAC Consulting)
• Producer interviews and farm business accounts
• AHDB market price data (where specifically cited)
• Processor annual reports and public statements
• Academic research from UK agricultural universities

We encourage readers to examine multiple data sources when making business decisions. Cost figures presented here represent reported ranges and modeled examples, not definitive national averages. Individual farm circumstances vary considerably. The core analysis and conclusions remain unchanged—UK dairy farmers face severe economic pressure requiring urgent attention and structural solutions.
We welcome input from all industry stakeholders, including AHDB, processors, and producers, to refine our understanding of UK dairy economics. If you have additional data or perspectives to share, please contact editorial@thebullvine.com.

Key Takeaways:

  • December’s Impossible Math: Based on industry cost estimates, many farms face potential losses of £17,000 monthly (35.85ppl milk vs estimated 49p/liter costs) while First Milk reports “exceptional” £20.5M profits—this gap won’t close without structural change
  • Why Ireland’s Fix Won’t Work Here: Irish farmers reversed cuts in 47 days through cooperative ownership UK doesn’t have—forming Producer Organizations requires lawyers, time, and bandwidth you lack while hemorrhaging money
  • Your Real Options: Of five paths forward, only planned exit guarantees equity preservation; organic needs £750k and 7 years; scaling requires £26-39M; diversification takes 18-24 months; cooperation needs resources you don’t have
  • The 90-Day Test: Watch DEFRA PO registrations by January 15, processor pricing late January, AHDB Q1 numbers in March—if nothing shifts, UK dairy accelerates from 7,040 to 4,200 farms by 2030

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When Your Cooperative Lets You Down: The $34M Wake-Up Call Every Dairy Producer Needs to Hear

Thursday, August 7th, 2025

$220 million in settlements since 2013 – and that’s just DFA. Your cooperative might be costing you more than you think.

EXECUTIVE SUMMARY: Look, here’s what really gets me about this whole thing: DFA and Select Milk just paid $34.4 million because they allegedly worked together to suppress milk prices instead of competing for our business. We’re talking about a decade-long scheme affecting over $3.5 billion in production across five states. And this isn’t DFA’s first rodeo – they’ve now paid out over $220 million in antitrust settlements since 2013. The kicker? Those new FMMO reforms that kicked in this June are cutting another 85-90 cents per hundredweight from our checks while potentially making it easier for this kind of coordination to happen. With DFA controlling 30% of raw milk marketing and the top three companies holding 83% of fluid milk sales, we’ve got a concentration problem that’s only getting worse. Bottom line: if you’re not questioning your cooperative relationship and documenting everything, you’re leaving money on the table and missing the bigger picture.

KEY TAKEAWAYS:

  • Document suspicious pricing patterns – if your cooperative and a “competitor” announce identical price changes within 24-48 hours, that’s worth noting and could be worth money later
  • Question your cooperative’s conflicts of interest – if they’re setting your milk price AND profiting from processing margins, demand transparency at annual meetings and board minutes
  • Explore alternative marketing channels – consider splitting production or direct processor contracts; one producer saw his main cooperative become more attentive after marketing just 30% elsewhere
  • Know your legal rights under Capper-Volstead – most producers don’t understand their antitrust protections; it’s worth a conversation with an ag attorney
  • Understand the transportation trap – with hauling costs over 75 cents per hundredweight beyond 150 miles, geographic concentration gives cooperatives more power to control pricing
dairy profitability, milk price, cooperative transparency, farm consolidation, FMMO reforms

What should keep you awake at night: the organizations supposedly fighting for better milk prices just paid $34.4 million because they were allegedly doing the exact opposite. When Dairy Farmers of America and Select Milk Producers write checks this large, it marks the third time DFA has been caught with its hand in the cookie jar since 2013. Think about that for a second – we’re talking about over $220 million in antitrust settlements from an organization that’s supposed to be working for farmers. At what point do we stop calling these “isolated incidents” and start recognizing a pattern?

Look, I’ve been watching this industry long enough to know when something stinks worse than a lagoon in July. This latest settlement isn’t really about the money, though DFA’s $24.5 million and Select Milk’s $9.9 million payout, as documented in Reuters’ July coverage, is certainly substantial.

How the Alleged Price-Fixing Scheme Actually Worked

The thing about this settlement is how systematic it all was. Court documents filed in the U.S. District Court for the District of New Mexico show that coordinated pricing strategies were implemented across New Mexico, Texas, Arizona, Oklahoma, and Kansas from January 2015 through June 2025 – a decade of alleged market manipulation affecting over $3.5 billion in annual dairy production.

Here’s what’s particularly troubling… instead of competing for your milk, these cooperatives allegedly worked together to keep prices artificially low. Dr. Michael Boehlje of Purdue University has written extensively about how cooperatives, once they achieve regional dominance, can effectively set procurement prices rather than compete for them – and this settlement seems to validate exactly that principle.

I’ve been speaking with producers in the settlement region, and what strikes me is the consistent reporting of similar patterns across their operations – neighbors shipping to supposedly competing cooperatives receiving identical pricing adjustments within days of each other. “Almost like they’re talking,” one told me. Turns out they might have been.

YearSettlement AmountRegion AffectedKey Details
2013$140 millionSoutheast USLargest single settlement, class action involving multiple states
2015$50 millionNortheast USRegional cooperative pricing coordination allegations
2025$34.4 millionSouthwest USCurrent settlement with DFA ($24.5M) and Select Milk ($9.9M)
Total$224.4 millionMultiple regionsDemonstrates ongoing legal challenges over 12 years

What really gets me is how this manipulation allegedly worked within the Federal Milk Marketing Order system. You know those FMMO mechanisms documented by USDA’s Agricultural Marketing Service that we’ve all been told protect fair pricing? When you have dominant cooperatives gaming the system, those protections can actually facilitate price manipulation rather than prevent it.

And here’s the kicker – those FMMO reforms that kicked in this June. The reforms implemented on June 1, 2025, increased make allowances, which are the estimated costs processors face in turning milk into cheese, butter, and other products. These increases effectively reduce the minimum prices guaranteed to producers under the milk pricing system, leading to lower net milk checks by $ 0.85 to $0.90 per hundredweight, according to an American Farm Bureau Federation analysis published by Brownfield Ag News.

Because make allowances are part of the pricing formula used by cooperatives and processors, those with processing operations can potentially exploit these changes to coordinate pricing behavior within the regulatory framework. This means regulatory reforms intended to improve market function might inadvertently provide opportunities for the very coordinated conduct antitrust laws aim to prevent.

The Market Structure Challenge Nobody Wants to Discuss

Market SegmentTop Player ShareTop 3 ShareCompetitive Status
Raw Milk MarketingDFA: 30%~65%Highly Concentrated
Fluid Milk SalesDFA: 39.1%83%Extremely Concentrated
Processing CapacityVaries by region39-41%Moderately Concentrated

I’ve been tracking dairy consolidation for years, but the numbers from Farm Action’s 2024 agricultural concentration analysis still shock me. DFA now controls roughly 30% of all raw milk marketing in this country. In fluid milk sales? The top three companies – led by DFA at 39.1% – control 83% of the market.

This isn’t normal market evolution, folks. This is a systematic concentration that creates what economists call “coordinated effects,” where companies don’t need explicit agreements because parallel behavior yields the same results.

Geographic concentration makes it even worse. In the settlement region, average hauling costs exceed 75 cents per hundredweight beyond 150 miles, according to transportation cost analyses from New Mexico State University. That means even if you wanted to switch cooperatives or find alternative buyers, the transportation economics trap you with whoever controls your local market.

I’ve spoken to producers in West Texas who have no choice but to sell to the dominant cooperative – and now we understand why those cooperatives might not have been competing for their business. Meanwhile, in Vermont, you still have smaller regionals actually bidding against each other for milk. The difference? Market structure, pure and simple.

Here’s the thing, though – while we’re focusing on the risks of concentrated market power, it’s important to acknowledge that many cooperatives, even large ones, provide valuable services to their members. These include milk marketing expertise, risk management programs, and access to processing facilities that small producers might struggle to reach on their own. Not all cooperative actions are allegedly self-serving.

However, recognizing these benefits doesn’t mean turning a blind eye to concerns regarding transparency, governance, and negotiation power that affect producers. It’s about balancing cooperative advantages with addressing real market pressure points.

Innovation is another casualty of this market structure. Without competitive pressure, cooperatives have little incentive to improve services or offer value-added programs. I’ve seen cooperatives in competitive markets offering everything from feed purchasing programs to veterinary services. In concentrated markets? Good luck getting your field rep to return calls.

This Isn’t Just About DFA – It’s About Power

Here’s what really gets me… this isn’t happening in isolation. The Department of Justice’s February 2025 lawsuit against Agri Stats targeted the company for facilitating information exchanges among agricultural processors. The federal court approved JBS’s $83.5 million cattle settlement in March 2025. McDonald’s is suing the “Big Four” meatpackers for alleged price fixing.

We’re seeing systematic enforcement across agriculture because the consolidation problem has reached crisis levels. And dairy? We might be the worst example of all.

Agricultural law experts consistently point out that this settlement pattern suggests a coordinated enforcement strategy targeting systematic information sharing among agricultural cooperatives. Federal prosecutors are building case law that limits how cooperatives can share competitive intelligence.

The legal precedent here is huge. The Capper-Volstead Act provides cooperatives with limited antitrust exemptions, but these protections explicitly exclude price-fixing conspiracies. What this settlement establishes is that federal prosecutors now have both the tools and willingness to go after agricultural cooperatives that allegedly abuse market power.

Industry professionals tell me they’re starting to ask uncomfortable questions at cooperative annual meetings. Questions about pricing transparency, board representation, and why premium structures seem to favor the largest operations. The responses? Often, it’s just “that information is confidential.”

That’s when you know something’s wrong.

The Real-World Impact: What This Settlement Means for Your Farm

The financial impact of this particular settlement amounts to approximately 30-50 cents per hundredweight over the affected decade. Not life-changing money, but when you’re dealing with feed costs running in the high $200s to low $300s per ton range for protein-rich dairy rations (based on current USDA Economic Research Service livestock outlook reports) and credit lines running 7-8% (according to USDA Farm Service Agency’s July 2025 rate announcements), every cent matters.

However, what really matters is documentation. Antitrust enforcement increasingly relies on electronic communication evidence. If you’re experiencing pricing patterns that seem coordinated, if you’re receiving identical offers from supposedly competing buyers, or if your cooperative is sharing information about your operation with competitors, document everything.

Recent analysis indicates that traditional cooperative governance structures are breaking down as large operations gain disproportionate influence. The old “one farmer, one vote” system doesn’t work when mega-dairies can effectively control cooperative decision-making.

I’ve seen this firsthand in several western cooperatives – where operations shipping thousands of loads annually essentially dictate policy for hundreds of smaller producers who might ship 50 loads per year. Do you think they receive the same treatment? Same pricing discussions? Same board representation proportionally?

Not a chance.

So what are your options? Start evaluating alternative marketing arrangements – and I mean seriously evaluate them, not just grumble at coffee shop meetings. Consider direct processor contracts, but be prepared for the added complexity. Consider regional cooperatives that maintain competitive bidding environments.

The Uncomfortable Truth About “Farmer-Owned”

Look, here’s what the industry doesn’t want to admit – market concentration has reached the point where even farmer-owned organizations can allegedly harm farmers. When cooperatives gain sufficient market power, they cease competing for your milk and instead coordinate to control it.

This settlement proves legal remedies exist, but they require substantial evidence and years of litigation. The real question is whether we will continue to pretend that this is about isolated bad actors or start acknowledging that our current system creates structural incentives for anti-competitive behavior.

Current Class III futures are trading around $18-19 per hundredweight for August delivery, according to CME market data, and every dollar of that pricing reflects market structure problems we’ve been ignoring for too long. The next generation of producers isn’t just worried about volatile milk prices. They’re concerned about whether competitive markets even exist anymore.

This is particularly troubling because of how it affects the next generation. What’s especially troubling is how this impacts the next generation; I’ve heard of operations where the grandfather had relationships with multiple buyers, allowing him to negotiate favorable terms by playing them against each other. Now? There’s essentially one buyer for a 200-mile radius, and it’s take it or leave it.

“It’s not the same business my grandpa knew,” is something you hear a lot these days. “Sometimes I wonder if there’s a place for operations like ours anymore.”

That’s the real cost of concentration – not just the money, but the hope.

Your Action Plan: How to Protect Your Operation

Here’s your action plan – and I’m not talking about some consultant’s PowerPoint presentation. This is real-world stuff you can do tomorrow:

Document everything suspicious. Screenshots of emails, notes from phone calls, patterns in pricing announcements. If your cooperative announces price changes and a “competitor” follows within 24-48 hours with identical adjustments, that’s worth noting.

Understand your cooperative’s conflicts. If they’re setting your milk price and profiting from processing margins, you need to understand how those incentives align —or don’t. Ask uncomfortable questions at annual meetings. Demand transparency in board minutes.

Explore your alternatives. This might mean splitting your production, marketing some milk directly, or joining smaller regional cooperatives that still actually compete. One producer I know started marketing 30% of his milk through a different channel – suddenly, his main cooperative became a lot more attentive.

Know your legal rights. Most producers are unaware of the protections they actually have under antitrust law and the Capper-Volstead exemptions. It’s worth consulting with an agricultural attorney who understands cooperative law.

The dairy industry is at a crossroads. We can continue to pretend that farmer-owned always means farmer-first, or we can demand transparency and accountability. Federal enforcers are finally paying attention to agricultural market concentration.

The question is: will you be part of the change or just a victim of it?

After $220 million in settlements, it’s clear someone needs to stop being polite and start asking the hard questions about who’s really running the show in our markets.

Complete references and supporting documentation are available upon request by contacting the editorial team at editor@thebullvine.com.

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Jersey vs. Holstein – The Debate Continues

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Monday, January 13th, 2014

One of the things that makes the dairy community great is the passion producers have for what they do.  One area that we have found that brings out the most passion is debating which breed is the best.  While there are many ways to look at it, the most logical way is to look at which breed is the most profitable.

Since we first joined this discussion back in May of 2012, (Read more: Holstein vs. Jersey: Which breed is more profitable) there have been many interesting points raised on both sides of this question.  So we here at the Bullvine decided to take a deeper look at this issue and see if we could get more insight into this much debated topic.

Now first let`s be clear.  This is a very lopsided debate because Holsteins are the primary breed on 92% of the farms in North America, and Jersey is only the primary breed on about 3.5%.  But man you have to love the passionately vocal nature of most Jersey breeders.

Feed Conversion

With feed accounting for between 52 and 58 percent of the total cost of production, any significant advantage for either breed is its ability to convert feed into milk solids, especially with the increased costs of feed these days.  While the superior overall production ability of a Holstein vs. a Jersey (Holstein 24,291 lbs of milk 888lbs Fat 3.66 % Fat 765 lbs Protein 3.15 % Protein vs. Jersey  16,997 lbs milk 776 lbs Fat 4.57% Fat 633 lbs Protein 3.73% Protein)  has  long been documented the true numbers lie in how well each breed converts their feed intake into milk and milk solids In a Dairy Science paper they looked at feed intake studies for 4 breed groups: Holstein, Holstein x Jersey, Jersey x Holstein and Jersey, where all cows were fed the same ration, were housed in the same type of pens and were milked together.  The results found that Holstein had the highest intake and the highest production yield.  However, Jersey converted a higher percentage of their intake to production than Holstein did.

Item

Holstein

HJ

JH

Jersey
Intake

9,813

9,309

9,487

7,969
Growth

669 (6.8%)

599 (6.4%)

496 (5.2%)

334 (4.2%)
Maintenance

2,666 (27.25)

2,468 (26.5%)

2,425 (25.6%)

2,085 (26.2)
Pregnancy

27 (0.3%)

32 (0.3%)

33 (0.3%)

21 (0.3%)
Production

5,968 (60.8%)

6,057 (65.1%)

6,162 (65.0%)

5,259 (66.0%)

The bottom line result of this research was that Jerseys were 6% better at converting intake into production.  That may not seem that significant until you factor in that feed costs are 52-58% of total costs.  That difference represents a 3.3% increase in profitability.  One thing is for sure, feed efficiency is certainly one area that we need to have more supporting research in order to develop genetic indices.

Milk Price

One of the key factors determining which breed is better depends on where you market your milk.  Certain pricing models favor fluid milk production while others favor component production.  Fluid markets certainly favor Holstein while component markets favor Jerseys.  Pennsylvania researchers used a farm level income and policy simulator (FLIPSIM) model to predict farm performance under fluid pricing or component pricing in Pennsylvania.  Under fluid pricing, a high producing (13,961 pounds) 60-cow Jersey herd could expect a net cash income of $32,300 versus $63,100 for a high producing (20,600 pounds) Holstein herd.  Under component pricing, the same Jersey herd would increase in net cash income to $55,400 versus $61,100 for the Holstein herd.  Under component pricing, a Jersey herd could expect an increase of about $23,000, while the Holstein herd would decline slightly.  Combine that with the increased feed efficiency of the Jersey’s mentioned above and, depending on the pricing model in your area, Jerseys would become a more profitable option.  Especially when you factor in the less volatile milk solids market as compared to fluid milk pricing.

Reproduction

For years Jerseys have enjoyed the reputation of being far superior to Holstein.  However, increased attention to this area by many producers may have changed or at least narrowed the gap.  This is certainly an area that many breeders are paying attention to, specifically the scores for Conception Rate (CR), Daughter Pregnancy Rate (DPR) and Calving Interval (CI).  The Days to First Breeding (DFB) declined for Holsteins from 92 d in 1996 to 85 d in 2007.  A similar trend was not observed for Jerseys, possibly because synchronized breeding is more common in Holstein herds than in Jersey herds.  As far as conception rates are concerned, Jerseys still have a slight edge over Holsteins.  But that trend is also changing.  As Holsteins have gone from 2.5 NB (Number of Breedings per lactation) in 1996 to 2.6 in 2007, while Jersey’s have gone from 2.2 in 1996 to 2.4 in 2007.

Now one area that I often hear comments from producers about is the value of the resulting calves.  Specifically that drop bull calves that will be sold for beef.  One of the great strategies I have seen employed by many Jersey and even top Holstein herds is to breed the bottom 10% of their herd to a beef sire.  As they know they will not be needing the resulting females or males from these animals the value of using a beef sire, typically more than compensates for the Holstein versus Jersey drop calf price.  Another management or reproduction tool that many producers are using is sexed semen which allows them to greatly decrease the number of female calves needed for replacements.

The Bullvine Bottom Line

Holstein and Jersey cows both have their advantages and disadvantages.  Holsteins are larger and have higher salvage value than Jerseys.  Jerseys tend to be more efficient and typically have fewer reproductive challenges. Each have an advantage under milk pricing that favors their particular productive strengths.  The first area you need to look at for what breed is better for you, is the milk pricing model in your area.  If it is a fluid market, then typically Holstein would be more advantageous. If the price model favors component pricing, then you would typically be better off milking Jerseys.  After looking at the price model, you certainly need to adjust your management to maximize the reproduction and feed efficiency for the breed you have chosen.  Even your housing set up could be better suited for one breed over the other.  While I am sure the Jersey versus Holstein debate will go on for years to come, there are certain new trends that may be contrary to previous beliefs and new feed efficiency information that are opening many producers’ eyes.

 

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