39% fewer farms. Record milk. If your strategy is ‘wait for the next good cycle,’ this article is your reality check.

Executive Summary: Dairy isn’t just in a rough patch—it’s in a structural reset where exits don’t automatically tighten supply anymore. USDA’s 2022 Census shows a 39% drop in farms selling milk between 2017 and 2022, yet total production still climbed to about 226 billion pounds from roughly 9.4 million cows, backing Rabobank’s finding that nearly 70% of U.S. milk now comes from herds with 1,000+ cows. At the same time, CoBank reports that replacement heifer inventories are at a 20‑year low and could shrink by another 800,000 head even as processors pour about $10 billion into new plants that will need more reliable, high‑volume milk supplies. High cull values, record heifer prices, and strong beef‑on‑dairy calf markets are reshaping net replacement costs and culling strategy, while regional realities—from Darigold’s $4/cwt Pasco deduction in the Pacific Northwest to stronger Class I returns in the Southeast and thin‑margin “deadly middle” herds in the Upper Midwest—are making geography as important as genetics. This feature gives producers an 18‑month playbook: clean out chronic problem cows while beef is still strong, treat a 0.1 gain in feed efficiency as a $35–55/cow/year opportunity, and sit down with processors and lenders before they end up making the big decisions for the farm. The aim isn’t to preach a single “right” model, but to put the math, regional context, and survival questions on the table so every herd—from 200‑cow grazing outfits to 4,000‑cow dry‑lot systems—can decide whether to grow, pivot, or exit on its own terms.

Most of us have ridden out more than one down cycle. You know the pattern: prices drop, some herds sell out, milk supply tightens, and eventually things come back around.

Back in the 2000s, Cooperatives Working Together (CWT) ran 10 herd retirement rounds between 2003 and 2010 that removed 506,921 cows and an estimated 9.672 billion pounds of milk, according to CWT program reports and University of Missouri economic analysis cited in both Progressive Dairy coverage and academic case studies on U.S. dairy market power.  Those removals were designed to pull milk off the market and did help support farmer milk prices during the 2009 crash, based on those evaluations.  The playbook then was pretty straightforward: enough cows and herds left the industry, and the market eventually corrected.

What’s interesting now is that we’re seeing plenty of exits again—but the milk isn’t disappearing the way it used to. USDA’s 2022 Census of Agriculture and milk-production summaries show that while farms with sales of milk from cows dropped from 40,336 in 2017 to 24,470 in 2022—a decline of about 39%—national milk output still climbed to around 226 billion pounds in 2022 with about 9.4 million milk cows, essentially steady cow numbers compared to prior years.  Industry outlets covering the same census data have underscored that almost 4 in 10 dairy farms disappeared over those 5 years, yet total U.S. milk sales rose about 5%.

So the quiet question a lot of folks are asking—over coffee at winter meetings or in the parlor office—is: if this isn’t just another cycle, what exactly are we dealing with?

And honestly, if you’re still betting the next round of sellouts will rescue your milk price, you’re betting against the numbers.

Let’s walk through what the data says, how it’s playing out in different regions, and the kinds of decisions that seem to matter most over the next 18 months.

Looking at This Trend: Old Playbook vs. New Reality

Looking at this trend over time, it’s pretty clear that the industry’s default settings have changed. The tools that worked from roughly 2000 through the mid‑2010s just don’t behave the same way anymore.

The Structural Reset

The old mindset assumed that enough CWT rounds or herd sales would tighten supply and lift prices. The data suggest something different: larger herds with lower costs per hundredweight are ready to step in when neighbors exit, blunting the supply‑tightening effect of those departures. University of Illinois economists looking at the 2022 Census noted that herds with 2,500 cows or more actually increased their share of the national milk supply even as total farm numbers dropped, confirming what many of us have seen anecdotally.

That’s a big shift in how risk and opportunity line up.

What the Census Is Really Telling You

The 2022 snapshot gets pretty eye‑opening when you dig into it. USDA’s dairy census highlights show that farms with sales of milk from cows fell from 40,336 in 2017 to 24,470 in 2022, a 39% drop in just five years.  Over that same period, NASS milk‑production data show total U.S. milk production at roughly 226 billion pounds in 2022, with an average of 9.4 million cows—almost the same number of cows producing more milk.

Rabobank’s consolidation analysis provides more detail. Senior dairy analyst Lucas Fuess points out that about 67–68% of U.S. milk is now produced on farms with 1,000 or more cows, even though those herds account for only a small single‑digit share of total operations.  Summary of the same work notes that farms with more than 1,000 head produced 67% of U.S. milk in 2022, up from 60% in 2017.

So what many of us have seen on the ground—the milk concentrating on fewer, larger farms—is exactly what the national numbers are telling us.

You probably know this pattern already if you’ve watched what happens when a neighbor exits. Many larger operations in Wisconsin, the West, and the Plains report absorbing cows from exiting neighbors—keeping the best animals, tightening up their fresh cow management and transition period, and culling more sharply for poor butterfat performance, health, and reproduction. The net result is that the milk doesn’t really leave the system. As one producer put it at a recent regional meeting, when a herd sells out, “the milk just changes addresses.”

That’s why one of the old assumptions—“enough farms sell out, and prices will snap back”—just isn’t as reliable as it used to be. The supply side has become much more resistant to exits because large herds, often with strong genetics and efficient systems, are ready and able to absorb the volume.

Regional Darwinism: Why Geography Is Now Destiny

What farmers are finding is that national averages hide a lot. Your region—and quite often your processor mix—now matters almost as much as your butterfat and protein levels when it comes to long‑term viability.

Pacific Northwest: When Headwinds Stack Up

In the Pacific Northwest, especially Washington and Oregon, producers are facing several headwinds at once.

The one everyone’s talking about is Darigold’s new plant at Pasco, Washington. Darigold announced and broke ground on a $600‑million production facility at the Port of Pasco in 2022, designed to handle milk for butter and powder and serve export markets, according to cooperative announcements and Bullvine coverage.  By May 2025, Capital Press was reporting that the plant was about $300 million over budget, based on people familiar with the project, pushing total costs toward $900 million.  Follow‑up coverage has described the Pasco facility as the largest dairy plant in the Northwest, coming online at a much higher price tag than originally forecast.

To help cover those overruns and broader financial strain, Darigold’s board approved a $4‑per‑hundredweight deduction on member milk checks for at least several months, with $2.50 of that earmarked explicitly for Pasco construction costs, according to a mid‑April member letter.  The $4/cwt reduction hit member pay prices in mid‑2025.  For a 500‑cow herd shipping 125,000 cwt a year, that’s roughly $500,000 less milk income across 12 months—before you even talk about feed, labor, or interest.

Several Washington producers shipping to Darigold have told reporters at Dairy Herd Management and local papers that the $4/cwt reduction, stacked on top of regular cooperative deductions, made it very hard to cash flow their operations.  Those are the kinds of numbers that separate “tight” from “unworkable.”

Then there’s the federal order piece. USDA federal order data shows Class I (fluid) utilization in the Pacific Northwest order hovering around 20–22% in recent years, while “All Markets Combined” Class I utilization nationally is typically in the mid‑ to upper‑20% range.  That gap matters because it means more milk in that region gets priced into lower‑valued Class III and IV pools rather than the Class I fluid market.

Regulation adds another layer. In Washington’s Yakima Valley, nitrate contamination concerns have led to consent decrees and added oversight of several large dairies, with some operations closing or restructuring under pressure from regulators and environmental groups, as described by Capital Press and Washington State Dairy Federation representatives.  So producers there are trying to operate under below‑average Class I utilization, substantial environmental scrutiny, and a major co‑op project that’s gone significantly over budget.

The Pasco Lesson: When Co‑op Projects Become Producer Risk

The Darigold Pasco story has become a cautionary lesson about how cooperative‑led capital projects can shift risk back onto member farms.

• Initial plan: A $600‑million, world‑class plant to process up to 8 million pounds of milk per day and export butter and powder to more than 30 countries.
• Updated reality: Cost overruns pushing total investment toward $900 million, plus a $4/cwt deduction on member milk checks, with $2.50 directly tied to the plant and the remainder covering other financial shortfalls.

What this development suggests isn’t that co‑ops shouldn’t invest. It’s that:

• The scale and risk of major projects need to be clearly communicated to members at the farm level.
• There should be a realistic plan for what happens if budgets slip or markets change.
• Producers need to know how much of their milk check might be diverted to debt service if things don’t go according to plan.

In plain terms, Pasco is a reminder of what co‑op membership really means: you’re not just selling milk—you’re partnering in capital decisions. That kind of surprise bill would hurt any operation, no matter how well run.

Southeast: Structural Tailwinds and Careful Optimism

Now slide across the map to the Southeast—Florida, Georgia, the Carolinas, parts of the lower Appalachians—and the structural picture looks very different.

USDA federal order summaries consistently show higher Class I utilization in Southeast‑oriented orders because of dense population and strong fluid‑milk demand.  That built‑in demand has always mattered, but recent policy changes have made it even more important.

USDA’s federal order modernization decision restored the “higher‑of” Class I skim pricing formula and updated Class I differentials. Analysis found that these changes tend to increase Class I values more in fluid‑deficit markets in the East and Southeast than in regions dominated by manufacturing.  Progressive Dairy and Dairy Herd coverage of the 2024–2025 seasons described many Southeastern producers as having one of their better financial years in a while, with improved Class I pricing, decent overall milk prices, and somewhat softer feed costs lining up in their favor.

So if you take two 500‑cow herds—similar genetics, comparable butterfat performance, similar feed efficiency—and put one in a strong Southeast Class I market and the other in a Western market with lower Class I utilization, it’s common for the Southeast herd to see significantly higher gross revenue at the same production level. That’s geography and policy working together, not just management.

Upper Midwest: The “Deadly Middle” in America’s Dairy Heartland

In Wisconsin and Minnesota, the story is familiar but still evolving. This region still feels like the heart of U.S. dairying, but a certain band of herds is under real structural pressure.

USDA and state data show licensed dairy herds in Wisconsin falling from more than 10,000 in the early 2010s to under 7,000 by 2022, even as total state milk production stays near or at record highs.  Farmdoc’s national work highlights the same pattern: sharp drops in herd numbers, modest changes in total cow numbers, and higher milk production overall.

Zisk Analytics’ profitability maps, featured regularly in Dairy Herd and other farm media, often show the Southeast and parts of the Southwest near the top for projected profit per cow, with many Upper Midwest herds—especially smaller and mid‑size ones—clustered in thinner‑margin categories.  Plenty of Midwest producers say they’re still “making it work,” but they also admit there isn’t much cushion left if something goes sideways.

The 400–600 Cow Squeeze: Dairy’s “Deadly Middle”

This is the segment that’s really stuck in the middle.

Typical profile of the 400–600 cow “no‑man’s land” herd:

• 400–600 Holsteins, often in 20‑ to 30‑year‑old parlors or older freestalls
• Solid, but not elite, feed efficiency and components
• Bulk milk is sold into commodity pools, with limited premiums
• Mix of family and hired labor, with real payroll costs
• Some debt, but not extreme

Too big to run purely on family labor. Too small to fully capture the per‑cow cost advantages that 1,500‑ or 3,000‑cow herds can achieve. Not differentiated enough to earn strong value‑added premiums consistently. That picture lines up with Rabobank’s census‑based finding that farms with 100–499 cows have lost share of U.S. milk output while 1,000‑plus cow units gained share.

In many Wisconsin operations and across the Upper Midwest, what I’ve noticed is that these herds often feel boxed in. They can’t easily cut costs without hurting cow comfort or fresh cow management. They can’t easily scale without major capital. And they’re not always well‑positioned for organic, grass‑based, or on‑farm processing.

If you’re in that 400–600 cow band, the uncomfortable reality is that staying “average” has become a very risky strategy. Hoping your way out of structural math isn’t a plan—it’s a gamble. That doesn’t mean you’re out of options. It does mean this group needs especially clear decisions: whether to pursue scale, chase premiums, partner with neighbors, or plan a well‑timed transition. Just waiting for the next “good cycle” is a much bigger bet than it used to be.

California: Big, Efficient, and Still Under Pressure

We can’t talk about U.S. dairy without mentioning California. The state still has more dairy cows than any other and remains a powerhouse for cheese, butter, and milk powder.

Reports from the California Department of Food and Agriculture and USDA’s milk production summaries show that California’s dairy cow numbers have leveled off or edged down slightly in recent years, while per‑cow production remains among the highest in the country.  Many of those cows are in large freestall and drylot systems with strong genetics, sophisticated feeding programs, and very deliberate fresh-cow management.

At the same time, California herds are navigating:

• Groundwater and surface‑water regulations that shape where and how dairies can operate
• Air quality and manure‑management rules that add cost and complexity
• High land and labor costs relative to many other regions
• A competitive but sometimes volatile processing environment

Analysts generally expect California to remain a major milk state, but to continue consolidating toward fewer, larger herds—similar to broader trends in the West.  Some operations will double down on scale and efficiency, while others are leaning into value‑added products or multi‑state footprints to spread risk.

What Farmers Are Finding About Feed Efficiency

What farmers are finding, as they dig into their numbers with nutritionists and Extension, is that feed efficiency may be one of the most powerful levers they still fully control.

A national dairy Extension article on feed efficiency describes energy‑corrected milk per pound of dry matter as one of the strongest and most overlooked tools on many dairies. As a guideline, that article notes that for each improvement of 0.1 unit in feed efficiency—say, from 1.4 to 1.5—the increase in income can range from 15 to 22 cents per cow per day, assuming typical milk and feed prices.  University economists and consultants have shown similar numbers, with Mike Hutjens demonstrating that feed efficiency improvements can quickly add tens of cents per cow per day to margins when feed costs are 15 cents per pound of dry matter.

To stay conservative, many advisors suggest budgeting 10–15 cents per cow per day for a 0.1 improvement. Over a full year, that’s about $35–55 per cow. On a 500‑cow herd, that’s roughly $18,000–27,500 a year from one modest bump in efficiency.

Peer‑reviewed work and Extension surveys on transition health and disease keep reinforcing that connection. A 2021 study of dairy herds in the journal Pathogens and subsequent reviews in Animals and other journals documented that mastitis and other health events increase treatment costs, reduce milk yield, and increase culling risk.  Reviews of cow longevity and economic performance show that herds with fewer transition‑period problems and better reproductive performance can improve both animal welfare and profitability by extending productive lifespans.

On real farms, the herds that are squeezing more milk out of each pound of dry matter tend to share a few habits:

• Forage testing and smart allocation. Forage analyses—NDF digestibility, starch, protein—are actually used, not just filed. The highest‑quality forages go to fresh and high‑producing cows, with lower‑quality lots assigned to late‑lactation cows and heifers. Extension specialists and industry nutritionists consistently show how differences in forage quality drive both butterfat performance and overall feed efficiency.
• Transition period as a non‑negotiable. Comfortable close‑up and fresh pens, consistent DCAD and energy strategies, and careful monitoring of fresh cow intakes and health are built into daily routines. Field work and research keep showing that fewer fresh‑cow disorders mean higher peaks, better reproduction, and more efficient use of feed over a cow’s life.
• Bunk management discipline. Feeding times are consistent, loading errors are minimized, refusals are checked, and feed is pushed up often enough that cows can access it throughout the day. Economists and nutritionists have pointed out how inconsistency—especially in timing and mix accuracy—can quietly erode both feed efficiency and component yields.

What’s encouraging is that most of these improvements don’t require new concrete. They require better measurement, clear targets, and consistent habits. In a year where margins are tight and interest isn’t cheap, that’s where a lot of the hidden money is.

Replacement Heifers, Beef‑on‑Dairy, and the New Culling Math

To understand why culling decisions feel so different now, you’ve got to look at heifers and calves.

A 2025 report from CoBank’s Knowledge Exchange, highlighted that U.S. dairy replacement heifer inventories have fallen to a roughly 20‑year low.  CoBank’s modeling suggests heifer inventories could shrink by another 800,000 headover the next two years before beginning to rebound around 2027, based on predictions of breeding practice changes and herd demographics.  That’s coming from sexed dairy semen being used more strategically on the top end of the herd, beef semen on the rest, and more disciplined replacement strategies.

USDA’s Agricultural Prices reports show average replacement dairy heifer values moving into the mid‑$2,000s nationally, with some states seeing averages in the high‑$2,000s.  In Wisconsin, the average replacement heifer prices jumped from about $1,990 to roughly $2,850 year over year—about a 69% increase—as the beef‑on‑dairy trend curtailed dairy heifer supply.  Reports also show Western Holstein springers bringing $4,000 or more at the top end.

On the beef side, allied beef‑on‑dairy programs have documented how crossbred calves that might have brought $600–700 a few years ago are now often selling for $1,000–1,400 in many markets, depending on weight and timing, and how reports of day‑old beef‑cross calves at $600–750 in some Midwest and Plains auctions have become more common.  Straight Holstein bull calves, as most of you unfortunately know from the checks, still trade at much lower levels.

In CoBank’s 2025 outlook, Corey Geiger, lead dairy economist at CoBank, emphasized that beef is contributing a larger share of total dairy revenue every year and that beef‑on‑dairy breeding has moved a significant portion of calves out of replacement pipelines and into beef streams.

Heifer & Beef‑on‑Dairy Economics at a Glance

Spread across the tank, that net replacement cost can quickly add 50–75 cents per cwt to your true cost of production, depending on cull rate and herd size. When you add in the fact that the transition period is still the highest‑risk phase of a cow’s life for disease, culling, and reproductive failure—something documented repeatedly in herd‑health research and field data—you can see why many herds are taking a closer look at which cows they ship and which they keep.

What I’ve noticed, talking with producers from the Upper Midwest to California’s Central Valley, is that many herds are shifting in three ways:

• Using culling to clean up truly chronic problems first: repeated mastitis or high SCC, cows that don’t breed back after multiple services, recurring lameness, and persistently low fat‑protein corrected milk.
• Being more thoughtful about longevity: hanging on to efficient, healthy fourth‑ or fifth‑lactation cows if they’re still producing well and breeding back, instead of automatically moving them just because of age. Recent work on cow longevity and economic performance from European and North American studies supports the idea that well‑managed, longer‑lived cows can improve both welfare and profit.
• Raising or buying fewer replacement heifers overall, but putting more emphasis on genetics, calf and heifer management, and a smooth transition into the milking herd for those they do keep.

Three Decisions That Matter in the Next 90 Days

Given all this—consolidation, regional differences, heifer inventories, processor investment—three near‑term decision areas keep coming up in conversations with producers, nutritionists, and lenders.

1. Culling While Beef Prices Are Still Favorable

Right now, cull cow values are historically strong in many regions. USDA market reports and industry summaries show sound cull cows bringing high prices relative to long‑term averages, supported by a tight national beef supply after heavy beef‑cow liquidation.  Beef‑market outlooks in USDA’s Livestock, Dairy, and Poultry Outlook and land‑grant analyses note that as the U.S. beef cow herd slowly rebuilds from very low levels, cull prices could soften over the next couple of years, especially if slaughter numbers ease.

For a 1,400‑pound cow, that’s easily a $250–300 swing per head between today’s strong prices and a softer market. For a 500‑cow herd with a 35% cull rate, that’s $40,000–50,000 across the year. So if you’ve got cows that are clearly on your “watch list”—chronic mastitis, repeated reproductive failures, recurring lameness that never fully resolves, consistently poor butterfat performance—the timing matters.

A simple cull checklist that many herds are using with their vets and consultants looks like this:

• Chronic mastitis or consistently high SCC despite treatment
• More than two or three unsuccessful breedings this lactation
• Recurring hoof problems affecting production or mobility
• Persistently low fat‑protein corrected milk compared with pen mates

At a recent Extension meeting in the Upper Midwest, a herd manager described sitting down with their vet and nutritionist, flagging about 60 cows that met those criteria, and prioritizing shipping them over several weeks while beef prices stayed strong. The cull income went straight to reducing their operating line and funding upgrades in their fresh‑cow area. Examples like that are showing up more often in Extension case studies and farm financial workshops.

If cull prices are 20% lower next year, are there cows you’ll wish you’d moved sooner? That’s the kind of question this window forces you to ask.

2. Treating Feed Efficiency as a Standing Agenda Item

We’ve already walked through the economics: a 0.1 bump in feed efficiency can reasonably be worth $35–55 per cow per year, or $18,000–27,500 on a 500‑cow herd, using conservative values drawn from Extension and economic analysis.

What farmers are finding is that the herds capturing that value aren’t necessarily spending more—they’re just managing more intentionally. A practical way to bake feed efficiency into your routine is to treat it as a standing agenda item at your regular herd meetings.

Here’s a simple framework to work from:

• This month: forage and ration review
  • Are all current forages tested for NDF digestibility, starch, and protein?
  • Are the highest‑quality forages being targeted to fresh and high‑producing groups?
  • Are ration changes reflected in updated dry‑matter intake targets for each group?
• This quarter: transition and fresh cow focus
  • Are close‑up and fresh pens overcrowded or short on bunk space?
  • Are fresh cows being checked daily for intakes, temperature, and behavior during the first 10–14 days in milk?
  • Are DA, ketosis, metritis, and early culling rates tracked and reviewed with your vet and nutritionist?
• Every week: bunk management habits
  • Are feeding times consistent from day to day?
  • Are refusals checked and recorded, not just guessed at?
  • Are feed push‑ups happening often enough to keep feed in reach between feedings?

From Wisconsin freestalls to Texas dry lot systems to Northeastern tie‑stalls, I’ve noticed the same pattern: the herds that treat feed efficiency as a core KPI—not just a once‑a‑year number—tend to be the ones that stay more resilient when margins tighten.

3. Getting Ahead of Liquidity and Risk Management

Class III futures and industry outlooks remain volatile for 2026, with projections shifting as feed costs, export demand, and herd size estimates change. USDA’s 2025 dairy outlooks highlight a wide range of possible milk‑price outcomes depending on those factors, rather than a single clear price path.  For herds with low cost of production and strong efficiency, most reasonable price scenarios can still work. For those needing $18–19 just to break even—including full debt service and family living—it’s worth paying very close attention.

Farm financial advisors—from land‑grant universities to private consultants—keep coming back to a few core moves:

• Use today’s strong beef and calf checks to build working capital. Paying down the operating line or building cash reserves when beef and beef‑cross calf prices are high gives you more room to maneuver if milk prices under‑perform. With interest costs where they are, every dollar you take off your line is worth more than it used to be.
• Sit down with your lender early, not late. Bringing updated cost‑of‑production numbers, your culling and heifer plan, and your feed‑efficiency priorities to the table changes the tone: you’re managing risk, not just reacting to it. University Extension finance specialists make the same point in their 2024–2025 dairy profitability guides.
• Match your risk tools to your comfort level. That might mean Dairy Margin Coverage for smaller herds, Dairy Revenue Protection or LGM for others, and selective use of forward contracting on milk or feed. The goal isn’t to hit the top of the market every time; it’s to keep the worst‑case scenarios off the table.

As one Wisconsin‑based advisor told a group at a recent meeting, you don’t want your first serious talk with the bank to be when you’re already in trouble. You want it to be when you still have options.

Why Processors Are Still Building While Farms Are Closing

A question that comes up a lot right now is: if producers are under this much pressure, why are processors pouring billions into new plants?

CoBank’s Knowledge Exchange team tackled that in a 2025 report. They estimate that the U.S. is undergoing a historic $10‑billion investment in new dairy‑processing capacity, expected to come online through 2027, much of it in large cheese, powder, and extended‑shelf‑life beverage plants in Texas, the Southwest, the Midwest, and the Northeast.  Darigold’s Pasco facility is one example of these large investments in the Northwest.

Rabobank’s consolidation reports reinforce the big picture: processors see long‑term domestic and export demand for dairy proteins and fats, but expect that demand to be met by fewer, larger, more efficient herds with lower per‑unit costs.  Modern plants designed to process 5–8 million pounds of milk per day require high utilization and a consistent supply to remain profitable.

Those plants aren’t being built for a world with more small herds. They’re being built assuming fewer, bigger suppliers who can hit volume and quality specs every day.

When you talk with processor representatives at meetings and plant tours, what often comes through is that they’re laser‑focused on reliability. They want suppliers who can hit volume, component, and food‑safety targets day in and day out. It’s simply easier to do that with a smaller group of large herds than with hundreds of small ones.

That doesn’t mean smaller and mid‑size farms are written out of the story. But it does mean they’re more likely to thrive if:

• They’re among the most efficient herds in their region.
• They supply processors that value specific quality traits—such as components, traceability, animal care, or local branding.
• They focus on premium or niche markets where volume isn’t the only metric that matters.

So Where Does This Go—and What Can You Do?

USDA’s long‑term baseline projections, combined with outlooks from CoBank and Rabobank, point in a broadly similar direction:

• Fewer dairy farms overall, but national cow numbers are hovering around 9–9.5 million in the medium term.
• A growing share of milk is coming from herds with 1,000 or more cows, continuing the trend already highlighted by the 2022 Census and consolidation analyses.
• Continued growth in regions like Texas, New Mexico, Idaho, South Dakota, and parts of the Southeast, with slower growth or contraction in higher‑cost or heavily regulated areas such as parts of the PNW and California.
• Ongoing processor consolidation and large‑scale plant investments, including dry lot and freestall‑based supply clusters in the Plains and Southwest.

Nobody can promise exactly what the five‑year average milk price will be. But the structural forces—consolidation, plant expansion, heifer shortages, beef‑on‑dairy, Class I reform—are not hypothetical. They’re visible in USDA data, industry reports, and the checks you’re cashing.

Different operations will respond differently. A 4,000‑cow dry lot in west Texas, a 1,600‑cow freestall in California’s Central Valley, a 600‑cow parlor dairy in Wisconsin, and a 200‑cow grazing herd in Vermont all have different strengths, constraints, and family goals.

What’s encouraging is that some of the most important questions are the same for all of them:

• Where’s our real edge—cost of production, components, quality, location, niche market, or some combination?
• Are we measuring feed efficiency, fresh cow performance, and butterfat and protein yields clearly enough to guide decisions?
• Does our region and processor mix support the kind of operation we want to be five to ten years from now?
• If not, what realistic paths do we have—scaling up, shifting markets, partnering with neighbors, or planning a dignified exit or transition?

The Bottom Line: Three Moves for the Next 18 Months

If you boil this down, here’s the hard truth: hoping the next “good cycle” will fix structural math is a much riskier bet than it used to be. In the next 18 months, most herds will be better off if they:

• Ship chronic problem cows while beef is still strong and replacement math still pencils, rather than waiting for cull prices to soften.
• Put a real dollar figure on a 0.1 feed‑efficiency gain for their own herd and pick one or two habits to move that number, using Extension benchmarks and their own records.
• Look their processor and region in the eye—on paper—and decide whether they’re doubling down, diversifying, or slowly pivoting, given the $10‑billion processing build‑out and the consolidation patterns already underway.

The “18‑month window” isn’t a countdown clock to disaster. It’s a realistic horizon in which most herds still have meaningful choices—about culling, feed efficiency, liquidity, and long‑term direction. Those choices are a lot easier to make while you still have room to maneuver than when your bank, your cooperative, or your cash flow is making them for you.

What I’ve noticed, talking with producers from British Columbia to Florida and from California to New York, is that the farms that come through tough stretches in good shape usually aren’t the ones with the fanciest barns. They’re the ones that combine solid cow sense with uncomfortable honesty about their numbers, their region, and their options—and then act before circumstances force their hand.

There’s still time to be one of those herds. The real opportunity in this next 18‑month stretch is to quietly, deliberately tilt the odds in your favor for whatever dairy looks like in 2030 and beyond. 

Key Takeaways

• Farm exits no longer fix milk prices. USDA’s 2022 Census shows 39% fewer dairy farms since 2017, yet total U.S. milk still climbed to 226 billion pounds—large herds absorb the volume, and the old “sellouts tighten supply” assumption no longer holds.
• Heifer inventories are at a 20-year low—and still falling. CoBank projects another 800,000-head decline before a 2027 rebound, pushing replacements into the mid-$2,000s nationally and past $4,000 for top Western springers.
• Geography now rivals genetics for survival. Darigold’s $4/cwt Pasco deduction, below-average Class I utilization in Western orders, and stronger fluid returns in the Southeast are making your region and processor mix as important as your herd’s butterfat.
• Feed efficiency is hidden cash you already control. A 0.1 improvement can add $35–55 per cow per year—up to $27,500 on a 500-cow herd—without new buildings or equipment.
• The next 18 months are a decision window, not a waiting room. Cull chronic cows while beef checks are strong, put a real dollar target on efficiency gains, and sit down with your lender while you still have options—not after your cash flow decides for you.

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

Learn More

• Feed Smart: Cutting Costs Without Compromising Cows in 2025 – Grab the blueprint to shave $470 per cow off your annual feed bill. This guide delivers precise procurement tactics for 2025’s volatile markets, arming you with the forage analysis and ration discipline needed to thrive.
• Decide or Decline: 2025 and the Future of Mid-Size Dairies – Face the hard truth about surviving the ‘deadly middle’ of dairy’s structural shift. This analysis breaks down five-year positioning for 500-head herds, unpacking the exact moves needed to protect your equity before regional processor leverage shifts entirely.
• Beef-on-Dairy’s $6,215 Secret: Why 72% of Herds Are Playing It Wrong – Stop leaking profit by treating beef-on-dairy like a side hustle. This deep dive exposes the genomic multipliers and reproductive benchmarks that separate elite operators from the 72% of herds currently playing the game wrong.

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