The number of milk-producing farms declined by nearly 39% in the five years leading up to the 2022 Census of Agriculture.
The survey of of farms and ranches conducted every five years reported 24,082 farms sold milk during 2022 – down from 39,303 in the 2017 census. There were 96,546 dairy farms only 25 years ago.
“Though fewer in number, larger operations continue to account for an increasing share of the U.S. milk supply,” says a report published Wednesday by Rabobank’s Food and Agribusiness Research division.
The 2022 ag census, issued Tuesday by USDA’ National Agricultural Statistics Service, shows that 2,013 farms with 1,000 or more cows (8% percent of dairy farms) produced 68% of U.S. milk.
The smaller number of even larger (2,500 or more cows) farms captured an even larger share of the market. They grew 17% in the five-year period, from 714 to 834, with the largest numerical growth in California (up 57), but notably also Texas (11), Wisconsin (14) and New York (16).
Rabobank estimates that the 2,500-plus farms (3% of all dairy farms) produce 46% of U.S. milk. Growth in the share of the herd on farms with 1,000 or more cows is dramatic. In 1997, farms of that size milked 17% of U.S. dairy cows. That grew to 40% in 2007 but to 65% in 2022.
The shrinking number of dairy farms produced 5% more milk from a nationwide herd of 9.4 million cows, a number that has not changed dramatically in recent years. The increased productivity is credited to continually improving cow genetics and better management.
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The economic forces driving the long-standing trend of farm consolidation largely mean that “large farms maximize economies of scale to drive continued growth,” says Rabobank.
Larger farms are “able to achieve a lower cost of production, higher margins and greater profitability,” says the report by Lucas Fuess, senior analyst for dairy at RaboResearch. Citing USDA data on the cost of milk production, he points out that the largest farms (those with 2,000 cows or more) can produce milk at total costs “sharply lower than smaller dairies’ costs.”
“In the future, it is likely that more cows will move to larger farms,” he wrote. And while larger farms continue to produce the bulk of the milk supply, smaller farms will continue to exist in sizable numbers, especially those practicing diversified agriculture and those that have kept debt levels low.”
The census shows the 20,631 farms with fewer than 500 head produce only 22% of the nation’s milk but account for 86% of total dairy operations. The larger number of smaller farms, he noted, are “offsetting their lower output with larger political clout,” as reflected in the milk margin payment programs adopted and continued by Congress in recent years.
Rabobank used a 10-year comparison (2013 to 2023) to depict regional trends in dairy farming. U.S. milk production increased by 25.3 billion pounds in that decade, but the gains were not shared equally among the 24 principal dairy states.
Texas showed the largest growth, especially in the Panhandle, with more processing facilities. “Wisconsin and Idaho reported the next largest growth,” it said, with gains also in Michigan, New York, Colorado and South Dakota.
