Archive for Net Merit 2025

The Protein Premium: How a 0.15% Milk Protein Gain Can Move Component Premiums and Your Milk Check

A 0.15% protein bump can be worth 25–40¢/cwt. The real question is: does your contract let any of it reach your milk check?

Executive Summary: Protein has quietly become dairy’s growth engine, as IFIC surveys, new 2025–2030 U.S. dietary guidelines, and GLP‑1 usage all push consumers toward higher‑protein foods and drinks. Circana and CoBank data show where the money is going: strong unit growth in high‑protein yogurt and cottage cheese, and RTD dairy‑based protein shakes surging from about $4.7B to $8.1B in four years. Processors have responded with billions in cheese, whey, yogurt, and cultured plant investments, which means they increasingly want “right milk”—high‑component milk that hits yield and margin targets without expensive ingredient protein. For many herds on Class III‑based component grids, a roughly 0.15‑point protein gain can be worth 25–40¢/cwt, but co‑op pooling vs direct, solids‑driven contracts largely determines how much of that ever reaches your milk check. On‑farm, the article shows how solid forage and fresh cow management, followed by smart amino acid balancing, can realistically add 0.10–0.20 points of protein, while the April 2025 NM$/TPI changes mean cheese‑market herds should rethink index choices and sire filters. A 90‑day playbook walks you through nailing your baseline, grilling your nutrition and milk pricing, updating your sire plan, and then deciding—based on your plant map and contracts—whether protein should be a major strategic lever or a secondary priority.

If you just stare at Class prices and milk production reports, it still feels like the same old dairy story. Flat or drifting‑down fluid, a few wild price spikes, a lot of noise. But here’s what’s really going on underneath that: a growing share of your customers are quietly reorganizing their diets around protein, processors are pouring billions into plants built around solids, and the indexes we use to pick bulls have already shifted toward that new reality.

On a typical Class III‑based component grid in the Upper Midwest, moving a herd from roughly 3.05% true protein to 3.20% at 80 pounds of milk per cow per day can easily be worth 25–40 cents per cwt on the protein line alone, before you factor in cheese yield bonuses. That’s a few thousand dollars a year on a 100‑cow herd, and tens of thousands on a 1,000‑cow operation, if your market actually rewards those components. The catch—the part most folks skip—is that not every plant, co‑op, or region passes that value back the same way.

Let’s walk through this the way we’d talk about it at your kitchen table: what’s changed with consumers, what the retail and plant numbers actually say, where nutrition and genetics can realistically move the needle, how co‑ops and contracts change who keeps the premium, and then a 90‑day plan you can use to decide how hard to chase protein in your own herd.

Looking at the Protein Trend from the Consumer’s Side

Looking at this trend from the consumer side first makes the rest of the story make a lot more sense.

The International Food Information Council (IFIC) has been running its Food & Health Survey for over twenty years. In their protein‑focused work from 2022–2025, they found that 59% of Americans said they were trying to consume protein in 2022, 67% in 2023, and 71% in 2024, with the 2025 survey showing interest holding at 70%. Those numbers come from nationally representative online samples of 1,000–3,000 adults each year, weighted for age, gender, and region, not just some fitness‑blog poll. IFIC’s July 2025 “Protein Spotlight” also notes that when these people say they care about protein, the most common thing they look for on labels is the grams of protein per serving.

Analysis of IFIC’s findings noted that roughly a quarter of Americans admit they don’t know how much protein they actually need. They’re chasing “high protein,” but they’re a bit foggy on the math. That confusion is important because it means simple, high‑protein messages on dairy labels can carry a lot of weight.

On the nutrition science side, several reviews over the last decade—published in journals like Nutrients and Applied Physiology, Nutrition, and Metabolism—have argued that the old adult RDA of 0.8 grams of protein per kilogram of body weight per day is probably too low for many older adults who want to maintain muscle and function. Those reviews generally support intakes of 1.0–1.2 g/kg/day for healthy older adults and 1.2–1.6 g/kg/day for those aiming to optimize muscle and metabolic health. When the 2025–2030 Dietary Guidelines for Americans were released in late 2025, coverage from Harvard’s School of Public Health and ag media highlighted that the new guidelines lean much more into higher‑protein patterns for older adults and explicitly recognize dairy as one of the key high‑quality protein sources.

Then there’s the GLP‑1 wave. A July 2024 JAMA article using KFF survey data reported that about one in eight U.S. adults had used a GLP‑1 drug like Ozempic or Wegovy, and KFF’s November 2025 polling found that roughly 12% of adults said they were currently taking a GLP‑1 medication for weight loss, diabetes, or related conditions. CoBank’s 2026 “Dairy Poised to Help Meet Consumers’ Growing Demand for Protein” report connects that to food choices: GLP‑1 users are eating fewer sugary, low‑protein snacks, but they still want foods and drinks that deliver satiety and protect lean mass. That has pushed many of them toward high‑protein yogurts, cottage cheese, and ready‑to‑drink protein shakes—many of which are dairy‑based.

So, putting that together:

  • More people are consciously chasing protein than even a few years ago.
  • Official guidelines are finally catching up and telling older adults to eat more protein.
  • A growing group of GLP‑1 users has fewer calories to “spend” and is steering more of them toward protein‑dense foods and drinks.
  • Dairy protein is complete, familiar, and easy for processors to formulate with.

The demand signal is there. The question is: where is that money actually showing up in the dairy case, and how does it flow back to your farm?

Where the Protein Money Is Showing Up in Retail

When you stop obsessing over fluid charts and look at scanner data, the protein story jumps off the page.

Analysis of retail performance for the 52 weeks ending November 2025 shows that across the entire grocery store, four dairy categories land in the top ten for unit growth:

  • Yogurt, led by Greek and other high‑protein styles, is second overall, with unit sales up 9.5%.
  • Natural cheese is third in unit growth, driven by snacking and shredded formats.
  • Cottage cheese is sixth, with a 14.5% jump in units—a big comeback story fuelled by high‑protein positioning.
  • Dairy creamers are tenth, with unit sales up 31.9%.

Its important to emphasize that these are unit increases, not just inflation. They also spell out that this data doesn’t include most of the ready‑to‑drink protein shake aisle, because those products are usually categorized under beverages or sports nutrition rather than traditional dairy.

YearRTD High-Protein Shake Sales (USD Billions)Growth Rate
20224.7
20235.9+25.5% YoY
20247.0+18.6% YoY
20258.1+15.7% YoY

CoBank fills in that gap. Their January 2026 analysis, based on Circana retail data, reports that U.S. RTD high‑protein shakes grew from $4.7 billion in annual sales to $8.1 billion over four years—about 71% growth. The report makes it very clear that the majority of that protein is dairy‑derived: whey protein concentrates and isolates, milk protein concentrate, and micellar casein. These products often sit near energy drinks or health foods, not in the milk case, but the protein in them is coming out of our cows.

So the retail reality looks like this:

  • High‑protein yogurts and cottage cheeses are growing solidly inside the dairy case.
  • Dairy creamers—many of them higher in added fats and flavors—are booming.
  • A multi‑billion‑dollar RTD protein market built largely on dairy ingredients is exploding just beyond the dairy aisle.

The dollars are chasing dairy protein, not just white milk.

The $2.8 Billion Processor Bet on “Right Milk.”

Now let’s sit where the processor sits for a minute.

2026 outlook estimates that roughly $2.8 billion has been invested in yogurt and cultured product plants in recent years, much of it in New York. Those plants are designed to handle high‑solids milk and turn it into Greek, skyr, cultured drinks, and other protein‑focused products. When you add in expansions at cheese and whey plants, fluid milk plants, and yogurt/cultured facilities, these categories account for just over 80% of new and expanded U.S. dairy processing capacity.

CoBank and Cheese Reporter coverage point to about $8 billion in total new or expanded U.S. dairy processing projects through 2026, with roughly half of that aimed at cheese and whey. Wisconsin and neighboring states have seen significant expansions in cheese and whey production. Idaho and other Western states have invested in cheese, skim milk powder, and nonfat dry milk plants, partly geared toward export markets. Texas and the southern Plains have attracted new large‑scale plants built around big herds, solids, and export‑oriented products.

Here’s the problem processors are running into—and it ties straight back to what’s in your bulk tank.

CategoryInvestment (USD Billions)Percentage of TotalFocus
Cheese & Whey Plants4.050%Solids-driven
Yogurt & Cultured2.835%High-protein products
Fluid & Powder1.215%Solids standardization
Total$8.0B100%

Over the last decade, U.S. Holstein genetics have pushed butterfat up fast. CDCB has documented that butterfat gains over the last base period have been impressive. Many American‑style cheese plants now receive milk with more butterfat than their vats can handle; they have to skim cream and standardize to target fat levels. If protein doesn’t rise in step with fat, the plant either:

  • Accepts a lower cheese yield per hundredweight than its business model assumed.
  • Buys milk protein concentrate or ultrafiltered milk to bring protein up.
  • Starts paying more attention to which farms deliver higher‑protein milk and looks for ways to reward that.

If a plant’s financial model is built around a milk pool averaging 3.3–3.4% true protein and the actual pool is closer to 3.1%, that gap is painful—especially at millions of pounds per day. More and more plant managers are saying, quietly but firmly, that they want “the right milk” rather than just “more milk.” In 2025, “right milk” often means higher solids, especially protein.

What Producers Are Really Seeing in the Ration

So what does it look like on your farm when you try to move protein in a way that actually pays and doesn’t wreck the ration?

What nutritionists and producers are finding is that the herds consistently making progress on protein don’t treat it as a one‑product miracle cure. They treat it as a fine‑tuning opportunity on top of good basics:

  • Strong forage quality and tight dry matter control.
  • Rumen‑friendly feeding with minimal sorting and consistent TMR delivery.
  • Solid fresh cow management in the transition period, so cows actually peak and don’t crash.

Once those pillars are in place, amino acid balancing starts to make sense.

A 2022 meta‑analysis by Chunbo Wei and co‑authors in the MDPI journal Animals compiled data from rumen‑protected methionine (RPM) trials conducted between 2010 and 2022. Their conclusion: when methionine is limiting in the diet, supplementing RPM doesn’t always push total milk volume higher, but it does significantly increase milk protein percentage and milk fat percentage, especially in high‑producing cows on well‑balanced rations. Using dose‑response models, they identified a sweet spot around 7.5–12.5 grams of RPM per cow per day for maximizing protein and fat percentages without wasting product.

Other work in Animals and the Journal of Dairy Science has shown similar patterns: microencapsulated methionine and newer methionine dipeptide products can raise milk protein yield and improve nitrogen efficiency when the rest of the ration is dialed in.

On the ground, nutritionists in Wisconsin, New York, Ontario, and Idaho describe results that match that research:

  • In well‑managed herds already producing 80–90 lb with decent butterfat performance, adding RPM and balancing methionine and lysine often nudges protein up by 0.10–0.20 points over 60–90 days, with small bumps in butterfat.
  • After confirming the response, some rations can safely trim crude protein—usually by reducing soybean meal or other expensive protein sources—while keeping or even lowering the ration cost per cwt and improving component levels.

Honestly, this is where most herds get tripped up. They hear about a neighbor’s protein bump, throw RPM into a ration built on variable corn silage and stressed fresh cows, and then complain when nothing happens. The Wei meta‑analysis and university work are clear: RPM is a scalpel, not a chainsaw. It works best on top of a good system, not instead of one.

If you’re thinking about amino acids, here’s a practical way to frame the conversation with your nutritionist:

  • Given our forage tests, butterfat performance, and current production, do you genuinely think methionine is limiting in our diet? Show me where you see that.
  • If we add, say, 10 g/cow/day of RPM, exactly which ingredient or crude protein level can we cut back on to make this a trade‑off, not just an extra cost?
  • In herds similar to ours—320‑cow freestall in Wisconsin, 80‑cow tie‑stall in Quebec, 900‑cow dry lot in Idaho—what milk protein and butterfat responses have you actually seen, and over what timeline?

Then, track components weekly for at least two to three months after changes. Don’t just go on gut feel.

Genetics: How the April 2025 Changes Repriced Protein

Nutrition is the short game. Genetics is the long game. And the rules of that long game shifted in April 2025.

USDA’s Animal Genomics and Improvement Laboratory (AGIL) and the Council on Dairy Cattle Breeding (CDCB) rolled out a major revision to Net Merit $ (NM$) in April 2025. According to the official AGIL report, the economic weights changed as follows:

  • Protein’s weight dropped from 19.6% to 13%.
  • Fat’s weight increased from 28.6% to 31.8%.
  • Milk volume’s weight rose from 0.3% to 3.2%.
  • Residual Feed Intake (as a feed efficiency trait) sits at about –6.8%.
  • Health, fertility, and longevity together account for just over 30% of the index.

AGIL explains that this shift reflects recent trends in U.S. markets: butterfat prices have been strong, and producers care more than ever about feed efficiency. Brownfield Ag News noted that the correlation between the old and new NM$ formulas is 0.992, meaning the reweighting doesn’t scramble the sire rankings—but it does send a message: fat is king right now in NM$, and protein has been dialed back.

TraitPre-April 2025 WeightPost-April 2025 WeightChange (points)Interpretation
Protein19.6%13.0%–6.6De-prioritized in NM$ formula
Fat28.6%31.8%+3.2Elevated; now top-weighted trait
Milk Volume0.3%3.2%+2.9Newly valued; reflects market preference
Feed Efficiency (RFI)–6.8%Penalty weight; cost-conscious trait
Health & Fertility~30% combined~30% combinedStableConsistent importance

On the TPI side, Holstein Association USA’s formula continues to place significant weight on both fat and protein, with production traits still accounting for a large share of the index. In the Feed Efficiency $ (FE$) component, the formula is:

FE$ = $1.86 × PTA Fat + $1.75 × PTA Protein + $0.13 × Feed Saved

So both fat and protein are strongly valued, with fat currently worth slightly more per pound in that equation. Cheese Merit $ (CM$) also continues to place heavier emphasis on protein and cheese solids than NM$, making it a better index for herds shipping mainly to cheese plants.

At the same time, the April 2025 base change shifted the reference point from 2015‑born cows to 2020‑born cows. CDCB documents show that the average Holstein PTA dropped by roughly 45 lb fat and 30 lb protein at the base reset, reflecting the genetic gains made over the previous five years. Brownfield’s coverage called this out explicitly and reminded producers that a lower PTA number doesn’t mean bulls got worse overnight; it means the average moved up.

From a practical standpoint, here’s what this means for your sire list:

  • If you’re shipping mainly into cheese markets, blindly chasing NM$ might not match your plant’s actual economics anymore. You probably want to look more at CM$ or create a custom index that boosts protein weight without overvaluing milk volume.
  • In those cheese markets, bulls with strong protein percentage deviations (+0.08% and higher) and good protein pounds fit the economics better than bulls that just add volume with flat or negative protein %.
  • If you’re in a more fluid‑oriented or heavily pooled market, you still care about protein pounds to maximize solids shipped, but you may not need to push percentage as hard—so long as you hold butterfat and health traits where they need to be.

ABS Global’s December 2025 sire summary basically spells this out, saying they’ve adjusted their sire lineup to “balance the scale with protein because of the significant improvements made in fat.” That’s a diplomatic way of saying: “We bred fat so hard for a decade that if we don’t deliberately select for protein now, we’ll drift off balance.”

If you’re still using the same sire selection rules you had before April 2025—circling the top NM$ list and calling it good—it’s worth asking yourself whether those rules still match how your milk is being paid in your market in 2025.

Co‑ops, Contracts, and Who Actually Keeps the Protein Premium

Now we come to the nerve point: even if you move your herd from 3.05% to 3.25% protein, who actually pockets that extra value?

In most of the Northeast and Upper Midwest, and everywhere in Canada, co‑ops and pooling dominate. Co‑ops do important work—balancing markets, managing risk, and giving farms a home for their milk when plants are full. But the way many co‑ops are structured, they also smooth out component and plant‑specific value across a broad membership.

2026 outlook hints at this when it explains how strong performance at yogurt and cheese plants in the Northeast flows back through co‑op pooling. Some of the value from high‑component milk going into those plants gets spread across all members, according to policy, rather than being laser‑targeted to the highest‑protein herds.

So if you push your herd’s protein from 3.10% to 3.25% and your neighbor sits at 2.95%, you’ll see some advantage through the pay grid and herd‑level quality bonuses, but you may not see the full premium that the plant is willing to pay for high‑protein milk.

On the flip side, CoBank has documented an increase in direct supply contracts in central New York, western Michigan, parts of Idaho, California, and Texas. In those systems, large herds ship directly to cheese plants, yogurt processors, or RTD beverage plants under contracts that specify:

  • A base price (usually tied to Class III or a blend).
  • Detailed component premiums and penalties, including quality.
  • Volume, consistency, and sometimes animal welfare or sustainability expectations.

In that setup, if a 2,500‑cow dairy lifts its protein 0.15–0.20 points, more of that value is likely to show up in their own milk check, because the contract spells out how components are rewarded. The trade‑off is that you’re tied more tightly to one buyer’s fortunes and performance metrics.

The point isn’t that co‑ops are bad and private contracts are good. It’s that the route your milk takes from the tank to the market that determines how much of the protein premium you keep.

A very practical exercise is to sit down with your milk statements and, if possible, your co‑op rep or buyer, and walk through:

  • How many dollars per cwt are you’re being paid for protein today at your current level.
  • What that would that look like if you were 0.15 points higher, using your own plant’s published grid or contract.
  • Whether there are specific programs—cheese pools, high solids tiers, quality alliances—you could realistically qualify for if you hit certain protein and butterfat levels.

If nobody can clearly show you how your extra protein would be paid, that’s your signal to start asking harder questions before you sink a lot of money into chasing it.

Geography: Your Hidden Advantage or Built‑In Handbrake

Another factor we don’t talk about enough when discussing components is geography. You can’t pick up your farm and move it closer to a better plant, but you can factor your location into how hard you push protein.

It is clear that New York is a prime example of a “high‑option” region: roughly $2.8 billion in yogurt and cultured investment, existing cheese plants, and multiple co‑ops and private buyers competing for milk. A 320‑cow freestall in central New York might be within an hour’s haul of several plants that value high‑solids milk, plus programs designed to reward it.

Region / ScenarioPlant DensityCo-op / Pool StructureProtein Premium (¢/cwt)Contract Direct Premium (¢/cwt)Competitive IntensityRecommended Strategy
NY (Central/Western)High (3–4 plants within 60 min)Co-op + Direct options28–4035–45Very HighLean hard into protein
WI / Upper MidwestHigh (2–3 cheese/whey plants)Co-op dominant22–3530–40HighProtein is a strong lever
Idaho / WestMedium (1–2 regional plants)Mix of co-op/direct15–2825–35MediumProtein helpful, not essential
Remote / Single PlantLow (1 plant, 90+ min haul)Pool dominated8–1218–25LowFeed efficiency > protein
Canada (ON/QC)Medium (regional plants + boards)Quota/board + co-op18–3028–38MediumProtein + solids focus

CoBank and Cheese Reporter highlight similar clusters:

  • In Wisconsin and surrounding states, there’s ongoing expansion in cheese and whey capacity. High‑component milk fits those plants very well.
  • In Idaho and the broader West, new cheese and powder plants have come online to serve export markets where solids are crucial.
  • In Texas and the southern Plains, newer large plants are hungry for efficient, high‑solids milk from large herds.

In those zones, pushing protein has a clearer upside because multiple processors and programs value that milk and can compete for it.

Now compare that to a 450‑cow dry lot in a more remote Western area with one major plant 90 minutes away and heavy pooling. Hauling is expensive, options are thin, and the local pool may not pay enough extra for higher protein to justify an aggressive push, especially if the plant is more focused on balancing volume. For that operation, it may make more sense to:

  • Keep protein in the competitive range for the pool.
  • Put more emphasis on feed efficiency (components per pound of dry matter), reproductive performance, and cash flow.
  • Make sure butterfat stays strong, since it still drives many checks.

In Canada, quota and provincial boards change the pricing math, but the plant reality is similar: processors still need solids to hit cheese and yogurt yields. A Quebec or Ontario herd close to major plants may have more incentive programs tied to solids than a more remote herd in a region with less processing.

The bottom line is that your plant map—distance, options, and growth trends—is just as important as your ration when you’re deciding how far to lean into protein.

Beyond the Dairy Case: Ingredient Markets and Snack Aisles

Another piece of the protein puzzle sits outside the traditional dairy section.

CoBank has reported on the growth of dairy protein ingredients—whey protein concentrate and isolate, milk protein concentrate, micellar casein—in everything from breakfast bars and cookies to “functional” beverages and meal replacements. Rising exports of U.S. whey products and skim milk powder/nonfat dry milk as global demand for high‑quality protein increases, especially in parts of Asia.

Research in Animal Frontiers and Nutrients has stressed that dairy proteins are high‑quality, complete proteins with excellent digestibility compared to many plant proteins. Those studies don’t ignore environmental concerns, but they reinforce dairy’s role in meeting protein needs, particularly for older adults and physically active people. Food companies read those papers and act on them.

So even when there’s no cow on the label, a big chunk of the protein in that “15 grams per serving” bar or drink may be coming from milk. That’s part of why you see whey plants being built and upgraded, and why processor and investor presentations keep coming back to “protein platforms” as a strategic focus.

Again, whether that shows up in your milk check depends on how your milk is pooled and priced. But the long‑term signal is that dairy protein demand isn’t fading away anytime soon.

What This Actually Means for Your Milk Check

So how does all this big‑picture stuff translate into dollars per cwt on your statement?

On a typical Upper Midwest Class III‑based component grid that pays for protein and butterfat directly, a move from roughly 3.05% to 3.20% true protein at 80 lb/cow/day can reasonably add 25–40 cents per cwt on the protein portion of the check, depending on the exact protein price that month. If you’re shipping to a plant that pays cheese yield bonuses based on both fat and protein, that higher protein percentage can also bump you into a better yield category worth another 10–20 cents per cwt.

Herd SizeCurrent Protein %Target Protein %Protein Gain (points)Protein Premium (¢/cwt)Cheese Yield Bonus (¢/cwt)Total Added Value (¢/cwt)Annual Milk Volume (cwt)Annual Revenue Gain (USD)
100 cow3.05%3.20%+0.15288368,000$2,880
320 cow3.08%3.23%+0.1530104025,600$10,240
1,000 cow3.10%3.25%+0.1532124480,000$35,200

On a 100‑cow herd shipping 8,000 cwt per year, that might be “only” a few thousand dollars—a nice improvement but not transformational. On a 1,000‑cow herd shipping 80,000 cwt, it can easily be tens of thousands of dollars per year if you actually capture it.

The big “if” is key:

  • If you’re in a market or pool where much of that value is spread across a wide membership, your own milk check will only see part of that.
  • If you’re in a direct contract or a plant‑specific program that pays explicitly for higher protein, you’re more likely to see the full impact.

That’s why it’s dangerous to talk about protein as if it’s automatically a gold mine for everyone. Where you are and how you’re paid matters as much as what your cows can do.

A 90‑Day Plan That Fits Real Herds

If you’re thinking, “We should at least know where we stand on this,” here’s a 90‑day plan that fits real life on a working dairy.

Step 1: Get Your Real Baseline (Weeks 1–2)

  • Pull 60–90 days of milk testing reports.
  • Write down your average true protein and butterfat, plus the range—don’t rely on memory.
  • Note your herd’s average days in milk and pounds per cow over that period.
  • Ask: are we consistently below 3.15–3.20% protein, or more in the 3.25–3.30% zone?

If you’re stuck under about 3.15% protein with unstable butterfat, that’s usually a forage and cow‑care issue before it’s an amino acid issue.

Step 2: Have a Focused Nutrition Strategy Session (Weeks 3–4)

Sit down with your nutritionist when neither of you is in a rush. Bring the numbers.

  • Ask if they believe methionine is actually limiting in your current diet, based on your forage tests and production. Ask them to show you where in the model they see that.
  • Discuss whether an RPM or methionine dipeptide product makes sense for your herd, referencing the published 7.5–12.5 g/cow/day “sweet spot” from the Wei meta‑analysis as a starting point—not a rule.
  • Insist on specificity: if we add 10 g/cow/day of this product, what exactly are we pulling back on—soybean meal, canola, bypass protein—so ration cost per cwt is neutral or close to it?

Define success up front: for many herds, a realistic target is a 0.08–0.12 percentage point increase in protein in 60–90 days without hurting butterfat or cow health.

Step 3: Tear Down Your Milk Check (Weeks 4–6)

Get your latest milk statements and, if you can, invite your co‑op field rep or plant buyer to walk through them with you.

  • Identify exactly how many dollars per cwt you’re currently earning from protein at your current level.
  • Calculate what your check would look like if your true protein were 0.15 points higher, using your plant’s real grid or contract.
  • Ask about plant‑specific programs: cheese pools, high‑solids tiers, or quality alliances that pay more for the kind of milk you could produce.

If the difference between your current protein and a realistic target is worth less than 10–15 cents per cwt under your structure, you may want to focus your next dollar somewhere else first. If it’s worth 25–40 cents per cwt and you’re within reach, protein should move up your priority list.

Step 4: Recalibrate Your Sire Strategy (Weeks 6–8)

Pull your current sire lineup and any bull proofs you’re using:

  • Look at PTA Protein (lbs) and protein% deviation alongside PTA Fat and fat%.
  • Check NM, and health traits like SCS, DPR, and Productive Life (or their equivalents).

Then talk with your AI rep:

  • Ask which bulls or mating strategies they’d recommend for a herd shipping mainly to cheese plants—or high‑protein yogurts—where protein percentage really matters.
  • Ask which bulls make more sense for a pooled, volume‑oriented market where protein lbs matter but % may not be heavily rewarded.
  • Ask how long it will realistically take for those genetic changes to show up in your bulk tank, given your culling and replacement rates.

If you’ve been breeding in “autopilot NM$” mode, this is the time to tweak your filters so you’re breeding for the pay formula you actually face, not the one you faced five years ago.

Step 5: Make a Conscious Strategic Call (Weeks 10–12)

By the end of 90 days, you should have:

  • A clear picture of your current protein and butterfat performance.
  • A grounded sense of what your herd can do with sensible nutrition and cow care.
  • Hard numbers on what extra protein is worth under your specific milk pay structure.
  • A refreshed sire plan that either leans into protein or deliberately doesn’t.

Then you make a conscious choice.

If you’re in a region with multiple solids‑focused plants, clear premiums, and a herd close to the thresholds, it probably makes sense to treat protein as a major strategic lever for the next three to five years.

If you’re in a single‑plant, heavily pooled environment where an extra 0.15 points of protein doesn’t move the needle much, you may decide to keep protein respectable but put more energy into feed efficiency, robot utilization, debt management, or labor—things that may offer a better return under your conditions.

There isn’t one right answer. But what’s become pretty obvious is that protein isn’t just a rounding error anymore. Consumers, guidelines, processors, and indexes have all moved. You can either let that movement happen to you, or you can decide where protein fits in your plan—with your plant map in one hand, your proofs and ration in the other, and your milk check right there on the table.

Key Takeaways

  • Protein demand is surging: 70% of Americans are actively seeking protein (IFIC 2025), RTD dairy shakes have grown from $4.7B to $8.1B in 4 years (CoBank), and new dietary guidelines support higher intakes.
  • Processors are rebuilding around solids: Billions have gone into U.S. cheese, whey, yogurt, and cultured plants—they want “right milk” that hits yield targets, not just volume.
  • The milk check math is real but contract-dependent: A 0.15-point protein gain can add 25–40¢/cwt on Class III grids, but co-op pooling often dilutes it; know your pay formula before you invest.
  • Nutrition works—if basics are solid first: Rumen-protected methionine at 7.5–12.5 g/cow/day can lift protein by 0.10–0.20 points, but only in herds with strong forage and fresh-cow management already in place.
  • Genetics shifted in April 2025—adjust your sire filters: NM$ now weights fat more heavily; cheese-market herds should prioritize CM$ or custom indexes and look for bulls with strong protein % deviation alongside health traits.

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

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From -43% to +0.8%: The Genetic Shift Powering Dairy’s First Fluid Milk Growth Since 2009

How Net Merit changes, fairlife’s $7.4 billion success, and the premium pivot are reshaping what your genetics are worth.

Dairy Genetic Shift

Executive Summary:  For the first time since 2009, fluid milk sales grew in 2024—up 0.8%, ending a 14-year decline. The turnaround didn’t come from better marketing of commodity milk; it came from building what consumers actually wanted: lactose-free, high-protein, premium products that command real price premiums. fairlife proved the model works spectacularly, generating $7.4 billion in total value for Coca-Cola and reshaping the value of dairy genetics. The April 2025 Net Merit revision tells the story: butterfat emphasis jumps to 31.8% while protein drops to 13.0%—volume-only genetics are losing economic ground. But here’s the hard truth: 40% of U.S. dairy farms exited between 2017 and 2022, and premium market access isn’t equally distributed. The strategic question for every producer is no longer whether this shift is real—it clearly is—but whether your operation’s genetics, scale, and processor relationships position you to capture value from it.

After decades of falling fluid milk sales, the industry posted growth in 2024 for the first time since 2009. The story behind that turnaround holds lessons for every farmer making decisions today.

By the Numbers: Dairy’s Turnaround at a Glance

MetricThenNow
Per capita fluid milk consumption247 lbs (1975)141 lbs (2020)
2024 fluid milk sales vs. 202314-year decline+0.8% growth
U.S. dairy farms39,303 (2017)24,082 (2022)
Milk from farms with 1,000+ cows60% (2017)68% (2022)
Holstein butterfat average3.9% (2019)4.23% (2024)
fairlife annual retail sales$90M (2015)$1B+ (2022)
Net Merit protein emphasis19.6% (2021)13.0% (April 2025)
Net Merit butterfat emphasis28.6% (2021)31.8% (April 2025)

Here’s something that caught a lot of people off guard last year. Fluid milk sales actually grew in 2024—not just stabilized, but genuinely increased. USDA data show total U.S. fluid milk sales were up about 0.8% from 2023, ending a 14-year streak of annual declines. The National Milk Producers Federation called it the first year-over-year gain since 2009.

That’s worth sitting with for a moment.

What’s interesting here isn’t just the number itself. It’s what had to happen to get there. This wasn’t a lucky break or some temporary consumer fad. The growth came after roughly a decade of strategic decisions that ran counter to almost everything the dairy industry had believed about competition and survival.

I’ve been watching this unfold for years now. The more you dig into what actually changed, the more you realize there’s a playbook here that matters to producers navigating what comes next.

Understanding How Deep the Decline Really Was

To make sense of the comeback, you need to understand how challenging things had gotten. Not just the headlines—the structural shift that was reshaping the entire category.

Between 1975 and 2020, per capita fluid milk consumption in the United States dropped by nearly 43%, according to Federal Milk Market Administrator data. We went from around 247 pounds annually down to about 141 pounds per person. Penn State Extension’s dairy trends research shows similar figures—they tracked a decline from 247 pounds in 1975 to 134 pounds by 2021. That’s not a temporary dip. That’s a generational shift away from a product that used to be on every breakfast table in America.

The reasons were accumulating, as many of us observed firsthand. Beverage options multiplied—sports drinks, bottled water, energy drinks, and the expanding coffee culture. Plant-based alternatives began to claim serious shelf space in the mid-2010s. Younger consumers, especially, seemed to be reconsidering whether dairy belonged in their daily routine.

And the financial pressure kept building. Class III prices dropped below $14 per hundredweight multiple times during 2018 and 2019. The Class III average for 2018 was just $14.61, the lowest in years. If you were shipping milk during those months, you remember.

Then came Dean Foods. The largest fluid milk processor in the country filed for Chapter 11 bankruptcy on November 12, 2019, in the Southern District of Texas—USDA’s Agricultural Marketing Service confirmed the filing date in subsequent proceedings. When a company of that size goes down, it sends a signal about industry direction. Or at least, that’s what everyone assumed at the time.

The Strategic Pivot: Asking a Different Question

The turning point, looking back, came when industry leadership started asking a fundamentally different question.

Instead of “How do we convince people to drink more regular milk?”—which promotion campaigns had been attempting for years—they asked: “What do modern consumers actually want that dairy could provide better than alternatives?”

Why does that distinction matter? Because it shifts the entire strategic framework.

Dairy Management Inc., the organization that manages the national dairy checkoff, commissioned extensive consumer research starting around 2014-2015. According to DMI’s published partnership reports, what they found reshaped the entire strategic approach.

Here’s what the research revealed: consumers weren’t rejecting dairy’s core benefits—protein, nutrition, taste. They were rejecting the format and the limitations. The National Institutes of Health estimates that somewhere between 30 and 50 million American adults are lactose intolerant—MedlinePlus and federal health resources have consistently cited this range. Many of those people wanted dairy’s nutritional benefits but couldn’t tolerate conventional milk. Others wanted higher protein for fitness goals, lower sugar for health reasons, or longer shelf life for convenience.

This consumer insight work became the foundation for everything that followed. DMI announced more than $500 million in fluid milk partnerships with seven major companies—Dairy Herd and other industry publications covered the announcement extensively. What’s particularly noteworthy is the leverage structure: most of that investment came from partners putting money into processing plants and infrastructure, while the checkoff’s direct commitment was about $30 million. That ratio—partners investing roughly $15 for every checkoff dollar—represents a fundamental strategic pivot from defending commodity milk to building new categories where dairy had natural advantages.

The fairlife Case Study

No single product illustrates the transformation better than fairlife, which has become Coca-Cola’s fastest-growing brand acquisition. The timeline is worth examining because it shows what patient long-term investment actually looks like in practice.

fairlife launched as a joint venture in 2012 between Select Milk Producers—a Texas-based dairy cooperative with just 99 member farms, as confirmed by multiple industry sources, including the Texas Agricultural Council and the University of Guelph—and Coca-Cola, which took an initial 42.5% ownership stake. The product uses ultrafiltration technology (not new technology exactly, but newly commercialized at scale) to concentrate protein, remove lactose, and reduce sugar while maintaining dairy’s nutritional profile.

National rollout came in late 2014, after test markets in Denver showed something remarkable. Coca-Cola’s Mike Saint John, speaking to industry groups, noted that the Denver test showed fairlife driving a 4% increase in fluid milk sales—not just capturing share from other brands, but actually growing the category. That distinction matters considerably when you’re trying to reverse a multi-decade decline.

The growth trajectory tells the story. By the mid-2010s, fairlife had reached about $90 million in annual sales. Industry estimates put 2019 sales at around $500 million. In January 2020, Coca-Cola acquired the remaining 57.5% stake for $979 million, according to SEC filings.

Here’s where the economics get striking. fairlife surpassed $1 billion in annual retail sales by 2021-2022, as Dairy Reporter and Coca-Cola’s earnings communications confirmed. The company’s SEC filings now show that total payments for fairlife—including the original acquisition plus performance-based earnouts—have reached approximately $7.4 billion. That earnout structure meant Coca-Cola paid more because fairlife exceeded financial targets.

YearRetail sales (USD billions)Cumulative value/investment (USD billions)
20150.090.50
20190.501.50
20221.005.00
20241.207.40

Today, fairlife sells at a clear premium to conventional milk in most retailers. High Ground Dairy’s analysis highlights these strong price premiums, while USDA retail price tracking shows conventional milk averaging about $4.39 per gallon in 2024. Consumers are paying meaningful premiums for a product delivering 50% more protein, 50% less sugar, no lactose, and a longer shelf life.

But Can Other Cooperatives Replicate This?

Here’s the question many producers are asking: Is the fairlife playbook actually replicable, or do you need Coca-Cola’s balance sheet to make it work?

The honest answer is complicated.

fairlife didn’t just have good milk—it had a partner with essentially unlimited capital, global distribution networks, and decades of beverage marketing expertise. Select Milk Producers brought the supply chain and dairy knowledge; Coca-Cola brought everything else. That’s not a model most regional cooperatives can simply copy.

fairlife’s own FAQ clarifies the supply structure: “As a milk processor, fairlife does not own farms or cows. We partner with dairy co-ops in geographies where we have plant locations to source milk.” All supplying farms must meet fairlife’s specific animal care requirements and maintain both FARM and Validus third-party certifications. That creates a meaningful barrier for farms not already connected to fairlife’s supply network.

Consider this: Select Milk Producers has just 99 member farms. That’s a deliberately small, carefully managed supplier base—not an open door for any operation wanting premium market access. And when Organic Valley, the largest organic dairy cooperative in the country, added new farms in 2023, they brought on just 84 operations, according to Dairy Herd reporting. Premium market access is growing, but it’s not unlimited.

For mid-sized cooperatives exploring this space, the entry barriers are substantial: processing infrastructure for ultrafiltration runs into the tens of millions; third-party certification programs require ongoing investment; and finding a retail or foodservice partner willing to commit long-term distribution adds another layer of complexity.

That said, some regional cooperatives are finding their own paths. Cobblestone Milk Cooperative in Virginia built its model around exceptionally high-quality standards—bacteria and somatic cell counts far below industry norms, as Dairy Herd has documented—creating differentiation without the use of ultrafiltration technology. The approach requires different capabilities than the fairlife model, but it shows there’s more than one route to premium positioning.

The key insight: fairlife’s success proves the premium fluid milk market exists and can grow. Replicating it requires either a massive corporate partnership or finding alternative differentiation strategies appropriate to your cooperative’s scale and capabilities.

The Genetics Angle: Why “Volume-Only” Selection Is Losing Ground

For Bullvine readers, here’s where the story gets especially relevant. The shift toward premium, composition-focused products isn’t just changing processor strategies—it’s fundamentally reshaping what genetics are worth money.

The April 2025 Net Merit revision from CDCB clearly tells the story. According to the official USDA-AGIL research document “Net merit as a measure of lifetime profit: 2025 revision,” the updated NM$ formula shifts emphasis significantly:

Trait2021 NM$ WeightApril 2025 NM$ WeightDirection
Protein19.6%13.0%↓ Decreased
Fat28.6%31.8%↑ Increased
Feed Saved12.0%17.8%↑ Increased
Productive Life11.0%8.0%↓ Decreased

Why the shift? Dr. Paul VanRaden, Research Geneticist at USDA and lead author of the Net Merit revision, describes NM$ 2025 as “a strategic response to the evolving dairy industry,” integrating recent economic data and market signals. Butterfat emphasis increased because consumer demand for butter and high-fat dairy products has strengthened. Protein emphasis decreased partly because the cheese market has matured, and premium fluid products like fairlife actually remove some protein during ultrafiltration.

The real-world expression of these genetic shifts is already visible. Corey Geiger with CoBank told Brownfield Ag News that Holstein butterfat levels reached a record 4.23% in 2024, while protein levels were 3.29%. The April 2025 genetic base change reflects this: Holsteins saw a 45-pound rollback on butterfat—that’s 87.5% higher than the 24-pound adjustment in 2020, and the largest base change in the breed’s genetic history. Protein rolled back 30 pounds.

Geiger’s projection is striking: he told Brownfield he believes butterfat levels “could pass five percent in the next decade” based on current consumer demand and genetic momentum.

What this means practically: bulls selected purely for milk volume without strong component percentages are becoming less valuable relative to high-component, high-health-trait sires. TPI formula adjustments reflect similar trends—Holstein Association USA has been increasing emphasis on fat and protein pounds while rebalancing type traits.

For breeding decisions today, the implications are clear:

  • Component percentages matter more than ever. A sire with +0.10% Protein and +0.35% Fat commands attention in ways volume-only genetics don’t.
  • Feed efficiency is gaining weight. The Feed Saved emphasis increase from 12% to 17.8% in NM$ reflects tighter margins and environmental pressure.
  • Health and longevity traits remain important but are being rebalanced against productivity gains.

The premium pivot isn’t just about finding a processor who’ll pay more for your milk. It’s about recognizing that the entire genetic selection framework is shifting toward what those premium products require.

The Two-Tiered Reality: Who Actually Benefits?

This brings us to what might be the most uncomfortable part of the story. The premium pivot and genetic evolution I’ve been describing don’t affect all operations equally. In fact, there’s a reasonable argument that these trends are accelerating the exit of smaller producers who can’t afford the entry costs.

The numbers are sobering. The 2022 USDA Census of Agriculture found just 24,082 U.S. dairy farms—down from 39,303 in 2017. That’s nearly a 40% decline in five years, as Brownfield Ag News and Dairy Reporter both reported. Lucas Fuess, senior dairy analyst at Rabobank, points out that 68% of U.S. milk now comes from farms with 1,000 or more cows—operations that represent only 8% of total farms.

Category20172022
Number of U.S. dairy farms39,30324,082
Share of milk from farms with 1,000+ cows60%68%
Estimated share of farms with 1,000+ cows6%8%
Cost advantage of >2,000-cow farms vs. 100–199$8/cwt cheaper$10/cwt cheaper

The cost dynamics are stark. USDA data show farms milking more than 2,000 cows can operate roughly $10 per hundredweight cheaper than farms with 100-199 cows. That’s not a small gap—it’s the difference between profitability and struggling to break even.

Meanwhile, the 50-99 cow category—traditionally the heart of family dairy—has seen dramatic declines according to USDA census data, with the segment nearly halving between 2017 and 2022. Dr. Frank Mitloehner at UC Davis has noted that one of the main reasons smaller dairy farms are disappearing is “ever-tightening profit margins,”—and larger farms’ cost advantages enable them to “achieve much higher net returns,” as Dairy Global reported.

Peter Vitaliano, economist for the National Milk Producers Federation, told Brownfield that 2023 saw nearly 6% of licensed dairy farms exit, and he expected “an even higher rate of dairy farm closures” in 2024. Industry analysts project that this consolidation trend will continue, with production increasingly concentrated on the largest operations.

So when we talk about genomic testing at $25-50 per head, third-party certification programs, and processor relationships that require data transparency and infrastructure investment—who can actually afford that?

For a 2,000-cow California operation, genomic testing the replacement heifer crop might run $50,000-100,000 annually—a meaningful but manageable investment against a multi-million dollar revenue base. The same testing for a 150-cow Vermont farm costs $3,750-7,500—proportionally similar, but coming out of a much tighter margin with far less negotiating leverage on the premium side.

The infrastructure requirements for premium programs add another layer. FARM certification, video monitoring at handling points, sustainability documentation, and unannounced audit preparation—these require administrative capacity that larger operations can absorb more easily than smaller ones running lean.

Does “Collaborative Competition” Help the Small Producer?

The DMI partnership model—where checkoff dollars leverage private investment—has clearly grown the premium category. But does that growth help the 150-cow operation, or does it primarily benefit the large farms and cooperatives already positioned to capture that value?

The evidence is mixed.

On one hand, composition-based pricing tiers are expanding across cooperatives of various sizes. FarmFirst, Foremost Farms, and DFA all have programs that, in theory, reward any member farm that ships high-component milk. Genetic improvement is available to everyone who chooses to pursue it.

On the other hand, premium market access often requires scale. fairlife’s supplier base is deliberately limited to 99 member farms in Select Milk Producers. Organic Valley added just 84 farms in 2023 despite significant producer interest. The infrastructure investments driving premium product growth—like fairlife’s $650 million Webster, New York facility—create jobs and markets, but they don’t automatically open doors for every nearby farm.

The most honest assessment: the premium pivot has created new opportunities, but those opportunities aren’t equally accessible. Farms with existing cooperative relationships, geographic proximity to premium processors, capital for certification and genetic investment, and administrative capacity for compliance requirements are better positioned than those without. The “collaborative competition” model has grown the pie, but the slices aren’t being distributed equally.

For smaller operations, the strategic question becomes: what premium pathways are actually accessible given your scale, location, and cooperative membership? Direct-to-consumer sales, farmstead processing, local food networks, and quality-differentiated regional cooperatives like Cobblestone may offer more realistic paths than trying to break into fairlife’s supply chain.

Navigating the Fair Oaks Crisis

Every turnaround has a moment where the whole thing nearly falls apart. For dairy’s innovation strategy, that moment came in June 2019.

The Animal Recovery Mission, an animal welfare organization, released undercover footage from Fair Oaks Farms—one of fairlife’s primary milk suppliers in Indiana. The footage showed systematic mistreatment of calves, and Dairy Reporter, along with other trade publications, covered the story extensively.

The response from retailers was immediate. Industry reporting confirmed that major chains, including Jewel-Osco, Tony’s Fresh Market, and several others, pulled fairlife from shelves within days. Consumer boycotts gained momentum. Class action lawsuits were filed alleging deceptive marketing around animal welfare claims.

What happened next offers lessons for crisis management across the industry.

Rather than minimize the situation or deflect blame, fairlife and Coca-Cola chose transparency. They immediately suspended all milk deliveries from Fair Oaks Farms. Dairy Reporter confirmed they increased unannounced audits at supplier farms from once annually to 24 times per year—a dramatic escalation in oversight. They installed video monitoring systems at animal handling points and commissioned independent investigations of all supplying farms.

fairlife’s 2024 Animal Stewardship Report, as covered by Food Dive, notes the company has invested, along with its suppliers, nearly $30 million in its animal welfare program since the crisis. The company eventually paid $21 million to settle related litigation—Food Dive called it one of the largest settlements ever in an animal welfare labeling case.

It was expensive. It was risky—admitting failure often accelerates brand damage in the short term. But the approach preserved something more valuable: trust in the brand and in the category. By 2020-2021, fairlife had returned to most retail shelves. By 2022, it reached $1 billion in sales.

Practical Implications for Producers

So that’s the industry-level narrative. But what does it mean for someone actually running a dairy operation? That’s the question that matters most.

The shift affecting producers most directly is the changing economics around milk composition. The traditional model rewarded volume—more pounds shipped meant more revenue. The emerging model increasingly rewards components and quality characteristics that premium products require.

I’ve talked with several Upper Midwest producers who are seeing this play out in real time. Farms focusing on protein percentage and butterfat rather than volume alone are reporting meaningful improvements in their milk checks—even when shipping slightly less total volume. It requires a different way of thinking about what you’re actually producing.

Here’s the practical reality. Current Class III prices have been running in the mid-to-upper teens per hundredweight according to USDA milk pricing data, with month-to-month variation. Farms meeting premium composition targets through preferred supplier programs can access additional premiums, though specific rates vary considerably by processor and region.

MetricHerd A – Volume FocusHerd B – Premium Components
Avg. milk shipped/cow/day90 lb82 lb
Butterfat / Protein test3.7% F / 3.05% P4.2% F / 3.25% P
Base milk price$18.00/cwt$18.00/cwt
Component & quality premiums$0.40/cwt$1.30/cwt
Net mailbox price$18.40/cwt$19.30/cwt

Regional dynamics matter here. Upper Midwest cooperatives like FarmFirst and Foremost Farms have been building out composition-based pricing tiers, according to their published producer communications. California’s larger operations often negotiate directly with processors. Southeastern producers working through DFA have seen new preferred supplier programs emerge over the past couple of years. Pacific Northwest operations shipping to Darigold have their own regional dynamics. The opportunity exists, but access varies.

What many producers are discovering is that capturing these premiums requires intentional decisions rather than hoping the bulk tank tests well:

Genomic testing is typically the starting point. Testing replacement heifers for protein traits, A2 beta-casein status, and kappa-casein genotype generally runs in the $25-50 range per animal through commercial services, though prices vary by service level and volume. University extension dairy genetics research confirms these trait associations translate to real composition differences in the bulk tank over time. For a 100-heifer crop, you’re looking at a few thousand dollars—an investment that can return value within the first year of improved milk checks if you’re making culling and breeding decisions based on the results.

Sire selection follows from testing—and this is where the Net Merit shifts become directly actionable. Bulls ranking high on protein percentage, fat percentage, A2A2 genetics, and kappa-casein BB genotypes are increasingly valuable. A2A2 milk commands premiums in some markets because consumers perceive it as easier to digest. Research published in the Journal of Dairy Science confirms that kappa-casein BB genetics improve the processing characteristics of milk for ultra-filtered products.

Given the April 2025 NM$ revision, which emphasizes butterfat (+31.8% weight) and feed efficiency (+17.8% weight) while de-emphasizing protein pounds, sire selection strategies should reflect these economic realities. Volume-only genetics—high milk pounds without strong component percentages—are losing ground in the index and in the marketplace.

It’s worth noting that these genetic shifts take time. We’re talking about a 3-5 year timeline before you see the full expression in your herd. Decisions made today won’t show up meaningfully in bulk tank averages until 2028-2030. That’s the reality of cattle genetics—no shortcuts available.

Processor relationships are becoming strategic rather than purely transactional. I’d encourage any producer reading this to contact your processor’s sourcing or sustainability department and ask directly: What composition targets are you looking for? What premiums do you offer for hitting them? Do you have a preferred supplier program?

Some processors—DFA, Darigold, Land O’Lakes, and others—have formal programs that offer price premiums, contract stability, and technical support to farms that commit to composition targets and data transparency. These programs aren’t always well-publicized, but they exist.

Certification requirements are expanding as well. fairlife, Horizon Organic, and other premium brands increasingly require third-party sustainability verification from their suppliers. FARM certification, DHI participation, and documented environmental practices are becoming baseline expectations rather than differentiators.

Challenges and Uncertainties Ahead

It would be incomplete to discuss this turnaround without acknowledging the challenges that remain. Success creates its own vulnerabilities.

  • Capacity constraints are affecting the market right now. fairlife is production-limited, according to Coca-Cola’s Q3 2024 earnings commentary. CEO James Quincey explicitly stated they couldn’t meet demand until new capacity comes online. Cowsmo reported on a 745,000-square-foot, $650 million facility under construction in Webster, New York, that should help, but it’s been a bottleneck.
  • Policy changes create uncertainty. The Federal Milk Marketing Order reform, taking effect in 2025, is expected to affect milk pricing in various ways. The exact impact depends on your region and class utilization, so it’s worth checking with your cooperative or university extension for current projections specific to your situation.
  • Plant-based competition continues. The category keeps growing, with various market research firms projecting continued expansion through the early 2030s. Growth has moderated from the rapid 2018-2020 period, but oat milk in particular continues gaining ground with younger consumers.
  • Consolidation pressure isn’t easing. The trajectory from the 2022 census—40% fewer farms in five years—continues to pressure mid-size operations caught between the flexibility of small farms and the cost advantages of large ones.
  • Complacency may be the biggest risk. The discipline that built the turnaround—long-term research investment, consumer-centric product development, collaborative strategy—is exactly what successful industries tend to abandon once growth returns. If checkoff boards redirect funding from innovation to short-term promotion, or if processors reduce R&D as margins improve, the momentum could stall.

The Underlying Lesson

Looking at this entire arc, there’s a counterintuitive insight that applies beyond dairy.

The instinct when an industry faces decline is to work harder at the existing business. Cut costs. Improve efficiency. Fight for market share. Promote more aggressively.

Dairy tried all of that for years. It wasn’t sufficient—because when the market itself is shifting away from your core product, being better at the old thing only delays the inevitable.

What changed around 2014-2015 was a fundamental acceptance that commodity fluid milk, as traditionally sold, was unlikely to return to growth. Instead of fighting that reality, industry leaders asked what they could build that consumers actually wanted, using the infrastructure and supply chain already in place.

Same farms. Same cows. Same processing facilities. But instead of trying to sell more commodity milk at mid-teens per hundredweight, the focus shifted to creating categories where dairy had genuine advantages: ultra-filtered, lactose-free, high-protein, composition-specific products commanding meaningful premiums.

Volume is flat or slightly declining. Revenue per farm is higher. Margin per cow improved. Farm sustainability is better—for those who can access the premium markets.

That last qualifier matters. The turnaround is real, but its benefits aren’t flowing equally to all producers. The strategic question for any individual operation isn’t whether the premium pivot worked at the industry level—it clearly did—but whether and how you can position to capture some of that value given your specific scale, location, genetics, and cooperative relationships.

The Bottom Line

The dairy industry in late 2025 sits at an interesting inflection point. The turnaround appears real—2024’s growth wasn’t an anomaly, and analysis suggests the trajectory is continuing. Premium categories are expanding. Consumer perceptions of dairy are improving among key demographics. Genetic selection is evolving to support composition-focused production.

But the foundational work isn’t complete. New processing capacity is still coming online. Composition-focused genetics will take another 3-5 years to express in herds that are now fully selecting. Policy and trade uncertainty could affect even well-planned operations. And the consolidation pressure that’s eliminated 40% of U.S. dairy farms since 2017 shows no sign of reversing.

For producers, the practical implications come down to several key considerations:

  • Assess your herd’s genetic profile if you haven’t already. The information shapes every breeding decision going forward. With NM$ now emphasizing butterfat and feed efficiency more heavily, your selection criteria may need updating.
  • Initiate conversations with your processor about composition premiums. Programs exist but aren’t always well-publicized. Ask specifically what they’re seeking and what they offer for hitting targets.
  • Be realistic about premium market access. Not every farm can break into fairlife’s supply chain or join Organic Valley. Understand which premium pathways are actually accessible given your scale and cooperative membership—and consider alternatives, such as quality-focused regional cooperatives or direct marketing—if the major premium programs aren’t realistic options.
  • Plan for the 2028-2030 timeframe, not just next year’s milk check. Genetic decisions compound over time. Processor relationships require time to develop. The farms positioned well three years from now are making those decisions today.
  • Watch the consolidation dynamics. If you’re a mid-size operation, clearly understand whether your cost structure and market access can remain competitive as larger operations continue to gain share.

The turnaround didn’t happen because someone discovered a compelling marketing message that made consumers embrace commodity milk again. It happened because the industry stopped trying to preserve something consumers had moved past and started building what they actually wanted.

That’s perhaps the most transferable insight here. Not the specific technology or product. The willingness to accept that what worked for 50 years may not work for the next 20—and to build something new while there’s still time.

Key Takeaways

  • The 15-year decline is over. Fluid milk sales grew 0.8% in 2024—driven by premium products like fairlife, not commodity milk marketing.
  • Your genetics are being repriced. April 2025 Net Merit boosts butterfat to 31.8% and cuts protein to 13.0%. Volume-only bulls are losing economic ground.
  • $7.4 billion proves the premium model. Coca-Cola’s total fairlife investment shows the upside is real—but capturing it requires scale, certifications, and cooperative positioning most farms don’t have.
  • 40% of U.S. dairy farms are already gone. Operations dropped from 39,303 (2017) to 24,082 (2022). Premium market benefits are concentrating in larger herds.
  • The question has changed. It’s no longer whether this shift is real—it’s whether your operation’s genetics, processor relationships, and market access position you to benefit from it. The farms winning in 2028 are making those decisions now.

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

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$11 Billion Bet on Protein: Is Your Milk Check Positioned to Win?

A structural shift in dairy economics is creating new opportunities for farms producing protein-rich milk—and understanding these dynamics can help inform decisions in the months ahead.

Executive Summary: Dairy processors just made an $11 billion bet on protein—and that changes the equation for every milk check in America. With whey protein isolate trading above $8.50 per pound and the April 2025 Net Merit revision boosting Feed Saved from 12% to nearly 18%, the industry is signaling where value is heading for the next decade. Producers combining targeted genetics with amino acid nutrition are seeing protein improvements worth $60,000-70,000 annually on 500-cow operations. The catch? Your pricing structure determines whether you actually capture that value. Farms in large pooled cooperatives often keep only a fraction of their component gains, while those on direct Class III pricing retain most of what they produce. Before investing in protein optimization, one comparison matters most: what you received per pound of protein versus the Class III protein price over your last three months. That gap reveals whether this opportunity is real for your operation—or whether you’d simply be subsidizing someone else’s premium.

You know, if you’ve been watching your milk checks closely over the past year or so, you’ve probably noticed something shifting. Back in May 2024, USDA Cold Storage data showed butter inventories climbing to nearly 380 million pounds—the highest we’d seen since 2020. That’s a lot of butter sitting in warehouses.

Metric20202024Change
Butter Cold Storage (million lbs)282380+35%
Whey Protein Isolate Price ($/lb)$5.10$8.50+67%
New Protein Facility Investment$2.1B$11.0B+424%

And here’s what got my attention: around the same time, cheese processors across the Upper Midwest started signaling they were receiving more cream than they needed for optimal cheese production. For those of us who remember when butterfat premiums seemed like they’d climb forever, it was a notable moment.

What’s happening isn’t that butterfat suddenly lost value—it hasn’t. It’s that processors have committed serious capital to cheese and whey protein facilities, and that’s changing what they need from the milk supply. The International Dairy Foods Association announced in October 2025 that America’s dairy processors have invested more than $11 billion in new and expanded manufacturing capacity across 19 states—with over 50 projects coming online between now and 2028.

That’s not a small bet. And it tells you something about where the industry sees value heading over the next decade.

Following the Investment Money

When I’m trying to understand where dairy markets are heading, I’ve always found it useful to watch where processors actually put their capital. Talk is cheap, but $870 million facilities tell you something.

That’s what Leprino Foods committed to their Lubbock, Texas plant—a decision the Texas Governor’s office and Texas Tech Research Park both documented back in April 2022. We’re talking about an 850,000-square-foot facility designed from the ground up for integrated mozzarella and whey protein production. When you build that kind of infrastructure, you’re making a decade-long bet on where value will come from.

And Leprino isn’t alone in this. Hilmar cut the ribbon on a $600 million facility in Dodge City, Kansas, back in March 2025—Dairy Processing magazine covered the opening extensively. Fonterra invested $240 million in New Zealand mozzarella capacity a few years back. Across Wisconsin and Minnesota, regional processors have been adding whey protein recovery equipment alongside cheese expansion projects.

What’s interesting is that this isn’t just a U.S. phenomenon. You’re seeing similar capital flowing toward protein and whey infrastructure in the EU and Oceania—which suggests this shift reflects global demand patterns rather than a temporary domestic trend. When processors on three continents are making the same bet, it’s worth paying attention.

What’s different about these investments compared to previous buildouts? The explicit focus on capturing whey value. I remember hearing Dr. Mark Stephenson—who recently retired as Director of Dairy Policy Analysis at UW-Madison—make this point at an industry meeting. Modern cheese plant economics increasingly depend on monetizing both the cheese and whey streams. Processors who can efficiently convert whey into high-value protein products have developed a meaningful competitive advantage.

The pricing reflects this shift. USDA data from late 2024 showed whey protein isolate climbing above $8.50 per pound—record territory—and prices have continued strengthening into 2025. If you look at USDA Dairy Market News reports, whey protein concentrate has more than doubled in many markets from where it sat back in 2018.

Why such sustained strength? Several factors have converged globally, which is part of what makes this feel structural rather than cyclical. China remains one of the world’s largest importers of dairy ingredients, with significant demand for infant formula components. Sports nutrition markets in Asia and Europe continue expanding. Meanwhile—and this one caught most of us off guard—the rapid adoption of GLP-1 weight-loss medications has created substantial new protein demand. Industry analysts have noted that patients on drugs like Ozempic are advised to maintain high protein intake, and that’s flowing through to whey consumption in ways nobody predicted five years ago.

When processors can generate meaningful revenue from whey alone, their willingness to pay for protein-rich milk makes straightforward economic sense.

What the Net Merit Changes Tell Us

The April 2025 revision to Net Merit offers another window into where the industry sees value heading. If you haven’t looked at the updated trait weights from the Council on Dairy Cattle Breeding, they’re worth examining.

Here’s how the emphasis shifted:

TraitPrevious Weight (2021)New Weight (2025)Change
Feed Saved12.0%17.8%+5.8%
Butterfat28.6%31.8%+3.2%
Protein19.6%13.0%-6.6%
Productive Life11.0%8.0%-3.0%
Cow Livability7.0%8.0%+1.0%
Heifer Livability1.3%2.0%+0.7%

That decrease in protein weight catches people off guard at first—it seems to contradict everything we’ve been discussing about protein demand. But dig into the methodology, and it makes more sense. Protein value is now being captured through multiple pathways in the formula—feed efficiency, component relationships, and longevity factors. A bull producing efficient daughters with strong components and a good productive life captures protein value across several trait categories rather than just one line item.

What does this means practically? Bulls that looked middling under older indexes—solid on efficiency and percentages but perhaps not flashy on production—are ranking considerably higher now. I’ve talked with several producers who’ve gone back through old sire catalogs and found bulls they’d passed over now sitting in the top tier.

One Wisconsin dairyman put it well: “Same genetics, completely different economic picture. The index finally caught up with what processors want to buy.”

The Nutrition Piece

Farms seeing the strongest protein gains are generally combining genetic direction with targeted nutrition work. The approach that’s gotten the most traction centers on rumen-protected amino acid supplementation—specifically methionine and lysine.

The science here is fairly well established at this point. Research published in the Journal of Dairy Science and extension work from programs like Penn State has documented that methionine and lysine are frequently the first-limiting amino acids for protein synthesis in typical corn silage-based Midwest rations. When you can get adequate methionine past the rumen and into the small intestine, cows can convert more of their dietary protein into milk protein.

What does implementation actually look like? Based on extension recommendations from Wisconsin, Minnesota, and Cornell, most successful protocols run around 15 grams of rumen-protected methionine per cow daily, balanced with lysine at roughly a 3:1 ratio. But the amino acids aren’t magic—they work best when the underlying ration is already well-balanced.

And here’s something I’ve noticed: farms often see protein responses from improving the basics before they even add supplements. Better feeding frequency, improved bunk management, attention to fresh cow nutrition during those critical first 60 days… sometimes the fundamentals matter most.

The transition period deserves particular attention. Research from land-grant universities has shown that close-up dry cow nutrition influences early lactation performance in meaningful ways. Getting that pre-fresh nutrition right sets the table for everything that follows.

When farms execute this well, they’re typically seeing protein improvements of 0.15 to 0.25 percentage points within a month or two—though results vary depending on the baseline diet and management. Run that math on a 500-cow herd, and you’re looking at meaningful dollars—potentially $60,000-70,000 annually at current component premiums.

Of course, there’s investment required on the front end. Amino acid programs run $25,000-35,000 per year for a herd that size, plus genetic program costs. Most farms doing this well are seeing positive returns within about a year.

But—and this is important—that math depends heavily on how your milk is actually priced.

The Pricing Question That Matters Most

Here’s where individual circumstances become crucial, and where I’ve seen producers make costly assumptions.

Not all milk payment systems reward improvements to components equally. Depending on your situation, the same investment might generate very different returns.

If you’re on component-indexed pricing—straight Class III or IV federal order payments—protein improvements generally flow through to your check within a few weeks. These operations typically capture a significant portion of the commodity value from their component gains.

Pooled cooperative pricing is more complicated. When your milk blends with dozens or hundreds of other farms before payment calculations happen, individual component improvements get diluted across the pool. I spoke with a producer in central Wisconsin who learned this the hard way—invested significantly in nutrition and genetics, moved his tank from 3.05% to 3.28% protein, but his cooperative pools 94 farms, and the pool average barely budged. He got paid on the pool number, not his individual achievement.

Fixed contracts present another scenario. Multi-year arrangements may not reflect component changes until renegotiation, regardless of what’s happening in commodity markets.

⚠️ A Word of Caution for Large-Pool Operations

If you’re shipping to a cooperative that pools 100+ farms, it’s worth getting written confirmation of how your individual component improvements will be valued before ramping up amino acid spending. Ask specifically: “Will my protein be paid out above the pool average, or blended into the pool before my check is calculated?”

I’ve seen situations where producers invested $30,000+ annually but captured only a fraction of the value their cows actually produced—in some cases, by my rough math, maybe 20-30% of what they’d have received under direct component pricing. Your numbers will be different, so pull your last few settlement sheets, compare your protein line item to the Class III protein price during those months, and see what the gap actually looks like for your operation.

Get the details in writing before you write that first feed additive check.

Pricing StructureComponent CapturePayment LagAnnual Impact (500-cow)Risk
Direct Class III90-98%2-3 weeks+$68,000Low
Small Pool Co-op (20)70-85%4-8 weeks+$52,000Moderate
Large Pool Co-op (100+)25-35%8-12 weeks+$22,000High
Fixed Multi-Year0% until renewal12-36 months$0-$15,000High

Before committing resources to protein optimization, have a direct conversation with your cooperative or processor. Some questions worth asking:

Questions for Your Processor

  • How exactly is protein valued in my payment?
  • What premium applies per point above baseline?
  • Is my pricing tied to commodity markets or fixed?
  • How does my individual production factor into payment versus pool averages?
  • Are changes to component pricing under consideration in the next few years?

Getting clear answers—ideally in writing—helps ensure your investments match your actual payment reality.

Thinking About Timing

Farms that started this work back in late 2024 have developed certain advantages—genetic progress, processor relationships, and, in some cases, contract terms that reflected the recruitment phase of new facility buildouts.

Looking at how things are unfolding: 2024-2025 represented the buildout phase, with new capacity coming online and processors actively seeking milk to fill facilities. Premium arrangements were more available during that window.

Through 2026-2027, we’ll likely see that capacity reaching target utilization. Processor relationships are solidifying, and the terms available to new suppliers may differ from what early movers secured.

By 2028-2029, assuming demand projections hold, markets should approach something like equilibrium. Premiums probably moderate from current peaks—not disappear, but normalize.

For operations starting now, this means entering somewhat behind early movers. Genetics compound over time, so there’s a gap that doesn’t fully close. But farms that begin today can still achieve meaningful improvement compared to operations that make no changes. The opportunity looks different from than it did in 2024, but it’s certainly not gone.

A Few Things Worth Thinking Through

Every strategic direction involves tradeoffs, and the protein focus is no exception. Here are a few considerations that deserve honest attention.

Component ratio balance matters for cheese manufacturing. Research from the American Dairy Products Institute indicates that most cheese production works best with protein-to-butterfat ratios in the 0.80-0.90 range. CoBank economist Corey Geiger has noted that cheesemakers strive for ratios near 0.80—anything significantly lower can affect cheese quality. Farms that substantially increase protein while butterfat falls may find their milk components less desirable for certain applications.

Input cost variability has surprised some operations. Rumen-protected amino acid prices spiked significantly back in 2021-2022 when supply disruptions hit. Building some flexibility into nutrition programs helps manage that exposure.

Genetic diversity deserves ongoing attention, too. With genomic selection concentrating breeding on popular sire families, inbreeding levels have climbed substantially over the past couple of decades—recent CDCB data shows levels exceeding 15% in some young Holstein bull populations. The costs show up in fertility and health over time, though they’re easy to overlook in the short term. Maintaining reasonable sire diversity isn’t just academic—it’s practical risk management.

Regional market variation matters quite a bit as well. Upper Midwest farms near major cheese processors are well-positioned for this approach. Operations in fluid milk markets or regions where butter production dominates may see more limited benefit regardless of their component achievements. Knowing your market matters before optimizing for it.

The Sustainability Angle

When sustainability premiums first entered industry conversations, I’ll admit to some skepticism about whether they’d actually show up at the farm level. That picture seems to be evolving.

With the EU’s Carbon Border Adjustment Mechanism set to take full effect next month, in January 2026, processors exporting cheese to Europe will face new carbon-intensity-based costs. This creates real incentive to source lower-emission milk. Paying farmers for documented carbon reductions becomes economically rational when it saves on export compliance costs.

Here’s what connects this to protein work: farms improving feed efficiency while maintaining strong milk components inherently reduce emissions per unit of output. Research from universities including Penn State and UC Davis suggests that improved efficiency translates to lower carbon intensity per pound of milk solids produced.

Done thoughtfully, component optimization and emissions reduction can complement each other rather than compete.

Several European cooperatives have already implemented farmer incentive programs along these lines. U.S. processors are developing pilot programs. This probably isn’t the primary reason to pursue protein optimization today, but it’s an increasingly relevant factor that may strengthen the case over time.

Getting Started Thoughtfully

For operations considering this direction, the first 90 days often matter more than elaborate long-term plans. Based on conversations with producers who’ve navigated this successfully, here’s a reasonable framework:

The first month should focus on understanding your actual situation. Document current milk composition—protein, butterfat, and their ratio. Have honest conversations with your processor about how components are valued in your payment. Look at your current genetics through the updated Net Merit lens.

The second month is for testing at conservative levels. Maybe start amino acid supplementation around 10-12 grams rather than full protocols. Focus on feeding fundamentals and bunk management. Track composition weekly rather than waiting for monthly tests.

By month three, you should have enough information to determine whether this fits your operation. If the response looks positive, genomic testing can identify your strongest replacement genetics. Continue building processor relationships with real data. Evaluate whether deeper investment makes sense given what you’ve learned.

This approach generates actual information before requiring major commitments.

The Bottom Line

The dairy industry is working through its most significant component value evolution in quite some time. How individual farms respond will depend substantially on their specific circumstances—pricing structure, regional market, capital situation, and risk tolerance.

A few things seem reasonably clear from the data and from conversations with producers navigating these decisions:

The underlying shift appears structural. Processor investments of $11 billion don’t respond to temporary signals. The infrastructure going in will influence economics for years.

Individual circumstances determine actual returns. Understanding precisely how your milk is priced matters enormously before committing resources.

Nutrition typically shows results faster than genetics. Amino acid work can demonstrate effects within weeks; genetic progress compounds over years. Using nutrition gains to fund genetic investment creates sustainable momentum.

Thoughtful risk management enhances outcomes. Maintaining component balance, reasonable fertility standards in genetic selection, sire diversity, and program flexibility all contribute to durable success.

Some farms will determine, after careful analysis, that their situation makes this direction less attractive. That’s genuinely useful information.

For others, there’s still an opportunity to develop a thoughtful approach aligned with where the industry appears headed. The terms differ from early mover advantages, but the fundamental economics remain sound for many operations.

Here’s your challenge: Pull your milk checks from the last 3 months this week. Calculate exactly what you received per pound of protein versus what the Class III protein price was during those months. If the gap is more than 15%, you’re losing money to your payment structure—and no amount of genetic progress or nutrition investment will close that gap until you address the pricing problem first.

The processors have placed their bets. The question is whether your operation is positioned to benefit—or whether you’re subsidizing someone else’s protein premium.

Key Takeaways 

  • $11 billion in new facilities signals processors are betting long-term on protein—this is structural, not cyclical
  • Net Merit 2025 reshuffled genetics—Feed Saved jumped from 12% to 18%; some bulls you overlooked now rank at the top
  • Nutrition delivers faster than genetics: 15g daily methionine + 3:1 lysine ratio can boost protein 0.15-0.25 points within 60 days
  • Your pricing structure is everything—farms in large pooled co-ops may capture only 20-30% of component improvements
  • Do the math before you invest: Compare 3 months of protein payments to Class III prices—a gap over 15% means fix pricing first

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

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CDCB Unveils Net Merit 2025: Updating Dairy Genetic Selection

Net Merit 2025 is set to revolutionize dairy breeding. Launching April 1, 2025, this updated index emphasizes butterfat, feed efficiency, and cow longevity. Discover how these changes could boost your herd’s profitability and shape the future of dairy farming. Are you ready for the next generation of genetics?

Summary:

The Council on Dairy Cattle Breeding (CDCB) is set to launch Net Merit 2025 on April 1, 2025, introducing significant updates to the genetic selection index for dairy farmers. This revision adjusts trait emphases to reflect current market trends and production realities, with notable changes including increased butterfat production, a greater focus on feed efficiency, and more weight on cow and heifer livability. The update aims to improve cow profitability over generations by combining economic values for 12 individual traits and five composite subindexes into a single value. While the changes are substantial, the high correlation between the 2025 and 2021 indexes suggests stability in genetic evaluations. Dairy farmers are encouraged to consider these updates in their long-term breeding strategies, considering that the index may not perfectly reflect individual farm conditions. Additional specialized indices are available for specific production systems, offering farmers flexibility in aligning genetic selection with their particular market and operational needs.

Key Takeaways:

  • The Council on Dairy Cattle Breeding (CDCB) will release Net Merit 2025 to enhance dairy genetic selection based on current market trends.
  • The updated index emphasizes butterfat production and livability while de-emphasizing protein to align with economic changes.
  • Specialized indices, such as Cheese Merit, Fluid Merit, and Grazing Merit, help tailor genetic selection to various production systems.
  • Net Merit provides a long-term strategy for improving dairy cow profitability, emphasizing trends of economically vital traits.
  • Farmers are encouraged to stay informed through USDA resources and industry workshops to incorporate Net Merit into breeding decisions optimally.
Net Merit 2025, dairy breeding, genetic selection index, cow profitability, dairy farming trends

The Council on Dairy Cattle Breeding (CDCB) will introduce Net Merit 2025, which includes updated genetic selection methods for dairy farmers, on April 1, 2025. This update revises genetic selection for dairy farmers nationwide and adjusts trait emphasis to reflect current market trends and production realities. 

What is Net Merit? 

The Lifetime Net Merit (NM$) index ranks dairy animals based on their combined genetic merit for economically important traits. Net Merit 2025 introduces innovative methods for evaluating traits and economic factors in dairy animals. 

Dr. Paul VanRaden, a Research Geneticist at USDA, highlights Net Merit 2025 as a strategic response to the evolving dairy industry. The update integrates recent economic data and research to assist farmers in breeding more profitable cows.

NM$ combines values of particular traits and subindexes to improve the profitability of cows over multiple generations. 

The Evolution of Net Merit 

First published in 1994 by the USDA’s Animal Improvement Programs Laboratory, Net Merit has been routinely updated at three—to four-year intervals. The index weights are based on an economic model that considers incomes and expenses over a dairy cow’s lifetime, using data from public sources when possible. 

Net Merit 2025 is the result of extensive collaboration. The process included: 

  • Initial drafting by USDA’s Animal Genomics and Improvement Laboratory (AGIL) in the summer of 2024
  • Public discussion at the CDCB Industry Meeting during World Dairy Expo
  • Presentation to university experts at the S-1096 Multistate Research Project meeting
  • Review by CDCB’s Genetic Evaluation Methods and Producer Advisory Committees
  • Final approval by the CDCB Board of Directors in December 2024

Key Changes in Net Merit 2025 

Comparison of Trait Weights

The following table shows the expected relative value of economically rooted weights of traits in the revised April 2025 Net Merit $ formula, compared to weights in the current formula:

TraitCurrent NM$April 2025 NM$
Protein19.6%13.0%
Fat28.6%31.8%
Feed Saved12.0%17.8%
Productive Life11.0%8.0%
Cow Livability7.0%8.0%
Udder Composite7.0%7.0%
Fertility6.8%6.8%
Heifer Livability1.3%2.0%

The 2025 revision includes significant changes: 

  • Butterfat Emphasis: The emphasis on butterfat production has increased, aligning with recent price trends. The weight of fat in NM$ has risen from 28.6 to 31.8.
  • Protein De-emphasis: The weight for protein decreased from 19.6 to 13.
  • Livability Focus: Greater emphasis on cow and heifer livability, reflecting higher cull cow and heifer calf prices.
  • Feed Efficiency: More negative emphasis on Body Weight Composite and greater focus on Residual Feed Intake to address feed costs.
  • Minimal Reranking: The 2025 and 2021 NM$ indexes show a high correlation of 0.992 for young Holstein bulls and 0.981 for recent progeny-tested bulls, indicating stability in genetic evaluations.

Customized Selection Indices 

In addition to NM$, CDCB offers three more indices customized for specific dairy operations: Cheese Merit (CM$), Fluid Merit (FM$), and Grazing Merit (GM$). 

  • Cheese Merit (CM$): Tailored for cheese producers, this index emphasizes protein and somatic cell score.
  • Fluid Merit (FM$): Designed for fluid milk producers, focusing on milk volume and butterfat.
  • Grazing Merit (GM$): Optimized for pasture-based systems, prioritizing fertility and adaptability.

These specialized indices allow farmers to align genetic selection with their specific market and production system. 

Applying Net Merit to Your Farm 

While Net Merit is a valuable tool, it may not comprehensively capture each farm’s conditions. Therefore, it is recommended that farmers prioritize evaluating the genetic progress trends for traits most vital to their operations. 

“Rather than focus on one number or another, it’s more helpful to look at the big picture,” suggests VanRaden. “USDA provides the expected genetic progress in each trait from selection on NM$, and it’s better to see if the trends for the traits most important to you are in the desired direction.” 

Long-Term Strategy for Herd Improvement 

Farmers should adopt a long-term perspective when considering Net Merit 2025 to achieve sustainable improvements in their herds. The index has been designed to improve cow profitability over the generations, requiring patience and consistent application. 

Staying Informed 

For the latest information on Net Merit and its applications: 

  1. Review USDA AGIL’s technical document detailing Net Merit calculations.
  2. Watch Paul VanRaden’s PowerPoint presentation, which summarizes changes and provides examples of how genetic values affect a cow’s lifetime profit.
  3. Engage with industry workshops and webinars to stay updated on genetic selection strategies.

Conclusion: Embracing the Future of Dairy Genetics 

Net Merit 2025 signifies the dairy industry’s dedication to advancement, efficiency, and sustainability beyond an index update. Embracing these tools and staying informed about industry developments can empower dairy farmers to succeed in a constantly evolving market. 

Looking ahead, farmers should actively engage with and adapt to these modifications. How do you plan to incorporate Net Merit 2025 into your breeding decisions? Share your thoughts and join the conversation shaping the future of dairy farming

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