US dairy consolidation likely to continue down the road

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men in milking parlor
Workers prepare for the next milking group at a dairy in central Ohio. (Farm and Dairy file photo)

Dairy farms in the US are consolidating at a faster rate today than any other agricultural commodity. In January 2020, the dairy cattle inventory was about 9.3 million cows distributed among 34,200 farms, with an average annual productivity per cow of about 23,000 pounds of milk.

About 50% of licensed dairy farms, mostly with less than 500 cows, ceased operation in the past 20 years at a rate of about 2,300 farms per year, or 6.3 dairy farms per day, without changing the national milk cow inventory.

dairy farms chart

The dairy industry consolidation is global, with similar trends in South America, Asia and Europe, characterized with fewer dairy farms of larger sizes. In today’s US dairy industry, about 5% of the dairy farms are milking almost 60% of cows (Figure 1). In other words, 1,700 large dairy farms are milking about 5.6 million cows, with an average herd size of about 3,300 cows.

This consolidation trend will likely continue with emphasis on improving the efficiency of processes, integrated with local communities and natural resources (land, water and energy), while meeting the demands of consumers and improving sustainability within production ecosystems.

There is a marked trend to implement regenerative management practices and to adopt precision technologies to achieve consistency with daily routine tasks. Since the first commercial milking robot’s installation on a dairy farm in 1992 in the Netherlands, over 35,000 dairy farms of all sizes have adopted this technology worldwide.

Labor

The U.S. farm labor shortages have been an issue for the past few decades as well.

This is likely influenced by demanding work schedules and physically demanding jobs, limited access to educational opportunities or simply individual preferences to live near larger urban communities with greater access to developed infrastructure such as Internet access, health services, entertainment, schools and shopping.

The labor shortage observed in rural America is also a global phenomenon, with similar trends in South America and Europe. Some dairy farms have been able to reverse this labor shortage by also providing their employees with housing, covering expenses associated with transportation, offering educational opportunities for employees and their families and providing work-related clothing.

In the next 20 years, following the latest US dairy farm consolidation trend (4% average per year for the past 15 years, or 8.8% dairies lost in 2018), we will likely have the same number of dairy cows (about 9.3 million) distributed across 15,000 dairy farms. This consolidation process will continue, and the profitability across farm sizes will likely determine at what rate.

These farms will likely be more efficient in terms of producing milk solids and monitoring their ecosystems.

Networks

Today, we see food systems completely integrated with an established network of suppliers and professionals, actively engaged with their local communities with a logistic that goes from the farm to consumers. Farms have been integrating best animal welfare and sustainability practices with strong emphasis on prevention and a process of continuous improvement.

Teamwork, commitment, leadership, consistency and communication are essential in modern production systems. The process of training professionals, employees and farm leaders requires us to identify these needs and transform them into opportunities.

In addition to veterinarians, nutritionists or agronomists, today we need developers of digital applications to integrate data points, visualize the complexity of production systems to improve decision making. We also need ag communicators to reach and connect with the new generation of consumers, and tell the story with facts and transparency.

References

References for this article include “Consolidation in U.S. Dairy Farming,” by James M. MacDonald, Jonathan Law and Roberto Mosheim; and “Dairy Cattle Management Practices in the United States, 2014,” from the U.S. Department of Agriculture.

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