COUNTRY REPORT ▶▶▶
A closer look at consolidation in the US
In the US, dairy industry consolidation continues. Farms with thousands of cows on site have sustainability challenges, but regulations and technology are keeping pace.
BY TREENA HEIN I
n the US, the dairy industry continues to consolidate, a process that has occurred in other agricultural sectors and other countries around the world over the last few decades.
And while this situation does present some concerns relat- ing to environmental sustainability and animal welfare, reg- ulations and technology are keeping pace to mitigate these concerns effectively. However, technical challenges still ex- ist in the effort towards further carbon emissions reductions – and eventually, carbon neutrality – across the entire US dairy industry. First, let’s look at how dairy farm size has grown and farm numbers have declined in the US. An update on this was pub- lished in mid-2020 by James MacDonald, Jonathan Law and Roberto Mosheim of the Economic Research Service of the US Department of Agriculture. They report that US dairy herd numbers fell by more than half between 2002 and 2019, with an accelerated decline in 2018 and 2019. In an associated ar- ticle (‘Scale Economies Provide Advantages to Large Dairy Farms’), MacDonald notes that in 1997, about 56% of US dairy cows were on farms of 199 cows at most, and only 18% were on farms with herds of 1,000 or more. By 2017 (see table), the number of these very small farms fell by two-thirds, while their share of all milk cows fell to 22%. At the same time, by 2017, farms with at least 1,000 cows had more than doubled in number and were home to 55% of the US dairy herd. MacDonald also notes that in 2017, the US Census of Agricul- ture listed 189 dairy farms with at least 5,000 cows, a large in- crease from only eight of that size in 1992. “Today, the very largest US dairy farms milk more than 25,000 cows,” he ex- plains in his article, “and are usually organised in a series of
10 ▶ DAIRY GLOBAL | Volume 8, No. 2, 2021
pods, each comprised of cow barns or lots, manure storage units, feed bunkers and milking facilities.”
Reasons for consolidation Dr Frank Mitloehner, a professor at University of California, Davis, believes that one of the main reasons smaller dairy farms are disappearing in the US is ever-tightening profit margins. In his article, MacDonald agrees, noting that larger farms generally have lower production costs than smaller farms. And because they can use economies of scale, “larger farms are more likely to realise positive net financial returns to milk production, even though their average revenues [per unit milk produced] are, on average, somewhat smaller than the revenues of smaller farms”. There is also added financial pressure on US dairy farms be- cause demand for dairy products is declining there. While production of milk has grown over time in the US, mostly due to growing population levels, per capita US milk consumption declined by 24% between 2000 and 2017 (as noted in an August 2020 article in Visual Capitalist called ‘MegaMilk: Charting Consolidation in the US Dairy Industry’). This is be- lieved to be due to factors such as the ageing population, a rising number of alternative dairy-like products and prefer- ences of those who continue to immigrate to the US.
PHOTO: RUUD PLOEG
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