Producers in the dairy Industry continue to increase efficiency and lower costs with larger farms. The Census of Agricultural does a survey every five years that includes the size of diary farms. The charts below show the trends over 35 years. The time span is lengthy to provide data that show trends that can predict the future accurately. The most recent census is 2022. The trends are very steady so the charts show how these trends (the dotted lines) will likely look like in the next census in 2027.
Over the course of these charts there are very significant changes. Dairy farms are no longer small family operations. The major reason is that small dairy farms cannot survive in today’s economy. Larger farms can be operated more efficiently.
There are many ways to improve economics that have been covered in prior posts. That includes the steady increases in butterfat and protein percentages and milk per cow. There are also major changes in breeding, feeding, etc.
Chart I below shows the decrease in small farms that have fewer than 200 cows. In 1992, 68% of the farms had fewer than 200 cows. Over 35 years, farms with under 200 cows have decreased to just 13% in 2022. By 2027 only 10% of the farms will have less than 200 cows.
Chart II follows a transforming pattern for farms with 200 cows to 1000 cows. During 1992 through 2007, the number of these farms was increasing. However, after that, the farms in this range began to decline. The 200 to 1000 cow farms had 23% of the cows in 2022. The decline is now slowing. Expect to have 22% of the farms in this category in 2027.
Chart III shows the pattern for farms of over 1000 cows. In 2022, 65% of the farms had over 1000 cows. The increase has been very steady, and the trend line shows an expected increase in 2027 to 72% of farms with over 1000 cows.
The number of cows has only changed by 5% during the 35 years in these charts (Chart IV). Over the span of this chart, the cows have produced more milk.
The dairy industry has continued to reduce cost with larger farms. Many are also located near the plants that process the milk, further reducing costs.
What could accelerate the increase in farms with over 1000 cows? The prior post showed that producer milk prices were low. This will economically force some of the smaller farms to grow or close. Currently there are too many cows for the current domestic consumption. That could delay some for the new farms designed for large herds. Exports will also impact the growth of larger farms.
Volatility has always impacted the dairy industry. These trends will continue to be followed in future posts.
