The United States produced 225.9 billion pounds of milk in 2024, 32 percent more than the 170.8 billion pounds of 2004 — and it did so with far fewer farms. Over the same two decades the number of licensed dairy herds fell 63 percent, from 66,825 to 24,811. Jeffrey Gillespie and Eric Njuki, economists at USDA's Economic Research Service, traced the shift through the dairy version of the Agricultural Resource Management Survey (ARMS) and the Census of Agriculture.

Part of the extra milk came from the cows themselves. Average output per cow rose 28 percent, from 18,960 pounds a year in 2004 to 24,178 pounds in 2024. But most of the gain in milk per farm came from farms growing larger. Between 2002 and 2022 the number of herds with fewer than 1,000 cows fell while the number with 1,000 or more rose 60 percent, and ARMS data put the average American dairy farm at 283 cows in 2021 against 112 in 2000.

Size and technology moved together. Between 2000 and 2021 the share of milk sales coming from farms with computerized milking systems climbed from 20 to 45 percent, and from farms milking three or more times a day from 19 to 50 percent. Computerized feed delivery went from 22 to 52 percent of sales, milking parlours from 70 to 88 percent, and advanced breeding methods — artificial insemination, embryo transfer and sexed semen — from 76 to 96 percent.

One technology went the other way. The share of milk sales from farms using recombinant bovine somatotropin, a growth hormone once widely used to lift yields, fell from 35 percent in 2000 to 2 percent in 2021, a drop the researchers attribute to marketing concerns.

Some of these tools are what the study calls scale-dependent: a farm has to reach a certain size before adopting one is feasible at all. That is part of why costs fall as herds grow. In 2021 it cost $42.71 to produce 100 pounds of milk on a herd of fewer than 50 cows, and $19.14 on a herd of 2,000 or more.

Covering those costs has been hard even so. Between 2000 and 2024 the average dairy farm covered its feed bill in every year, and its full operating costs — feed, labour, inputs and services — in all but two, 2009 and 2012. Once ownership costs for buildings, equipment and insurance are added, the average farm covered its costs in 13 of the 25 years. Counting total economic costs, which include unpaid labour and land, it managed in only four.

Size is not destiny, the researchers caution. High-cost and low-cost producers are found in every size class, depending on which technologies a farm uses, how it is managed, what it is paid for milk and cattle, what it pays for inputs, and even the environment it works in. Farms that cover their costs, and farms that do not, exist at every scale.

Source: USDA Economic Research Service