A recent report from the U.S Department of Agriculture (USDA) provides details about the level of consolidation within the dairy industry. The ‘Consolidation in U.S. Dairy Farming’ report found that the number of licensed U.S. dairy herds fell by more than half between 2002 and 2019, with an accelerating rate of decline in 2018 and 2019 while milk production continued to grow.
Several factors have contributed to the scale of consolidation within the dairy industry. Larger farms have significantly lower costs of production on average compared to smaller farms, with increasingly larger herd sizes appearing to increase the level of cost savings. The midpoint for herd size grew substantially between 1987 and 2017, from 80 cows, to 1,300 cows.
The pace of consolidation within the dairy sector far exceeds the pace of that seen in most other areas of U.S. agriculture. If the number of farms continue to decline at an average rate of four percent each year, it is expected that there will be a little more than 31,000 licensed dairy herds by the end of 2021.
Listen to the radio report below.