MILKING IT! Challenges for Dairy Farmers, Processors…and Consumers!


I have a strange view and relationship with Milk! It doesn’t come from the markets, I think I’ve only brokered Dairy Futures less than a handful of times in my life. I suppose it comes from my primary school days, when each morning break, my school handed out little cartons of milk to each pupil. It was a communal exercise that we all undertook, which on hot summer days was a welcomed cool drink. Then one day, it all stopped! As a child, I don’t suppose I really understood why…but I still remember those days even now. This is why in these times of so much ‘milk‘ choice, what used to come in glass bottles with a red foil top…and now comes in a plastic bottle with a blue twist cap, which still strikes a certain chord with me.


So, you can imagine my surprise when glancing through emails back in March this year, I learnt that the U.S. had lost 6% of its dairy farms in 2021. This in a country of 332 million, where there are fewer than 30,000 dairy farms1


. This seems an inordinate low


number of farms per head of population, roughly one dairy farm per 10,375 people. This has been a continuing trend for a number of years.


THE U.S. HAD LOST 6% OF ITS DAIRY FARMS IN 2021…


Until now, I have been referencing the United States…but the challenges for dairy farmers are not solely in the United States. It is in international dairy farming. I’ve already touched on a few of the challenges that dairy farmers have to face. To these you can also add more recent events, such as supply chain disruptions of various forms, labour shortages,


Since 2003, when the dairy farm total then stood at 70,375, there has been a drop each year until today. The biggest drop was in 2019 when 9% of dairy farms in the U.S. disappeared. Many put the reason for these falls onto an ageing dairy farmer population that is retiring and an industry that doesn’t seem to be able to attract younger people to become dairy farmers. Yet, not all the news is bad. For instance, the size of the dairy herds has increased with a total of approximately 9.44 million Milk Cows in the United States. Additionally, the productivity of Milk Cows has increased by 11.5% between 2011 to 2019…and this is still increasing. Interestingly, I always thought it was the State of Wisconsin that produced most of the Milk in the United States. Well, it turns out it is second…by a long distance…compared to California! The inference from all this, is that dairy herds, will continue to be concentrated in ownership and also become larger. One note of concern highlighted in the survey is the Heifer Replacement Percentage of Milk Cows (young female calves retained for future dairy herd integration). In 2021, the low rate of 48.8% was the lowest since at least 2010. A combination of events including COVID, fuel price increases, cost of feed rising and financing costs that all started in 2021 to tighten cashflows and more recent increases have become even more evident.


10 | ADMISI - The Ghost In The Machine | Q2 Edition 2022


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