Dairy evolution - a decade of growth and challenges

By Scout Nelson

Over the last decade, the dairy industry has rapidly evolved, moving away from traditional hand milking to advanced technologies.

This change has brought increased efficiencies and new challenges. Dairy producers have embraced opportunities to advance their farms despite these challenges.

Michael Dykes, CEO of the International Dairy Foods Association (IDFA), shared at the Dairy Forum in Phoenix earlier this year that the industry has a growth mindset. “Our farmers want to grow and so do our processors. If we aren’t growing, if we aren’t looking towards the future, we’re going to get surpassed by others,” he said. He noted that 60% of processing executives are optimistic for 2024, with 73% planning to increase investments over the next 3 to 5 years.

Phil Plourd, president of Ever.Ag Insights, highlighted the financial challenges, stating that interest costs for building a 6,000-cow dairy have risen significantly, which may limit expansion.

Dairy herds are migrating from coastal areas to inland states like South Dakota, which has seen a 70.5% increase in dairy cows since 2019. Evan Grong, sales manager for Valley Queen, attributes this growth to factors like access to feed production, abundant groundwater, and dairy processing investments.

However, states with stricter environmental regulations and higher labor costs, like California, are seeing a decline in dairy operations. David Lemstra, a dairy producer, moved his 4,000-cow operation from California to South Dakota due to these challenges.

With over $7 billion (about $22 per person in the US) in planned processing investments, states like South Dakota and Texas are poised for significant growth. For example, Agropur in South Dakota and Panhandle Products in Texas have both increased their processing capacities.

Despite low milk prices and economic uncertainties in 2024, many dairy producers remain optimistic about the future. The Dairy Farmers of America (DFA) anticipate a decrease in member farms by 2030, but a Farm Journal survey of 210 dairy producers reveals that many plan to grow their operations through various means, such as increasing cow numbers or investing in technology.

Top challenges for dairy producers include volatile milk prices, regulatory pressures, and rising input costs. However, many producers are turning to technology to improve efficiency and profitability. Larger operations with multiple sites and significant land holdings are more likely to succeed and grow.

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