Prices for producer milk are low. The primary factors are low butterfat and protein prices. What is causing this? Too many cows and too much milk. This post will show where these trends are going. Cow numbers are still increasing, not decreasing. Milk per cow is improving, contributing to too much milk. Milk production is still increasing, not decreasing despite minimal changes in domestic consumption.
Charts I, II, and III below show the current trends. Many current articles have expressed that there is too much milk. A prior post to this site has shown the need to export excess milk products.
Chart I shows the growth in milk production. From 2021 to 2024 milk production was flat. In 2025 and 2026, the amount of milk per month significantly increased. The increase is 771 million pounds of milk per month, a 4% increase
Chart II shows the number of milk cows. It has grown steadily in 2025 through June 2026, increasing by 227,000 cows, an increase of 3%.
Chart III shows the growth in milk per cow. From 2021 to June 2026, it has grown by 3%. This is an important factor in lowering the cost of milk per cow. However, with more milk per cow, there should be a decrease in the number of cows needed. As shown in Chart II, there is a significant increase in the number of cows.
So where are these increases in cows and milk coming from? The U.S. increased by 227,000 cows over the span of this post.
Texas has the largest increase of 109,000 cows. Most of that is movement from New Mexico which has lost 98,000 cows due to limited water and other financial issues.
The next largest increase is in South Dakota with an increase in 103,000 cows. South Dakota has increased milk and cheese production because the area has a good climate, abundant feed and water, a positive business-friendly environment. and the cheese produced is close to many markets. Their increased number of cows represents 45% of the total U.S. growth in milk cows over the span of these charts. This increase in cheese production has lowered U.S. cheese prices as domestic consumption is not increasing.
Idaho exited the Federal order system in 2004. Over the course from 2021 to June 2026, they have increased cows by 81,000, which is a growth of 13%.
Kansas has increased cows by 66,000, an increase of 38%. There is a strategic shift toward the High Plains, driven by affordable land, abundant feed, a dry climate that keeps cattle healthy, and new local processing plants that give farmers a ready market for their milk
How has this affected revenue for farms? Income has dropped drastically and many farms, primarily small dairy farms, must close. Below is the impact on some of the most important component prices.
Chart IV follows the price of butterfat per pound. It has fallen by 54% from its high in October of 2023.
Chart IV tracks the price of milk protein. Typically, protein prices increase when butterfat prices fall. However, protein prices have not increased in 2025 and 2026. With the excess cheese mentioned above, wholesale prices of cheese have fallen significantly.
Are prices paid to farms increasing? NO!
Future posts will cover the decrease in dairy herds as the current economics cannot support small operations.
