Fewer farms, more milk: how scale reshaped US dairy in two decades

American dairy farms are getting fewer while milk output keeps rising. In an analysis published in its magazine Amber Waves on 23 February 2026, USDA's Economic Research Service (ERS) reported that the United States produced 225.9 billion pounds of milk in 2024, 32 percent more than the 170.8 billion pounds of 2004. Over the same two decades the number of licensed dairy herds fell 63 percent, from 66,825 to 24,811. ERS economists Jeffrey Gillespie and Eric Njuki traced the shift through the Census of Agriculture and the dairy version of the Agricultural Resource Management Survey (ARMS).

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. ARMS data put the average American dairy farm at 283 cows in 2021, against 112 in 2000.

The trend is a long one. An ERS report of July 2020, Consolidation in U.S. Dairy Farming, found that in 1987 half of all US milk cows were in herds of 80 or more; by 2017 that midpoint had reached 1,300 cows. By 2017 nearly 2,000 farms had at least 1,000 cows and milked over half of the country's cows, while 25 years earlier just over 500 such farms milked less than 10 percent.

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 and milking parlours from 70 to 88 percent. Advanced breeding methods, such as artificial insemination, embryo transfer and sexed semen, rose from 76 to 96 percent.

One technology went the other way. Bovine somatotropin (bST) is a growth hormone that the US Food and Drug Administration approved in 1993, under the brand name Posilac, to raise milk yields; it is injected under the skin every 14 days during lactation. The share of milk sales from farms using it 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 costs has been hard even so. Between 2000 and 2024 the average dairy farm covered its feed bill every year, and its full operating costs (feed, labour, inputs and services) in every year except 2009 and 2012. Once ownership costs for buildings, equipment and insurance are added, it 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. Which technologies a farm uses, how it is managed, what it is paid for milk and cattle, what it pays for inputs and even its surroundings all shape its costs, and high-cost and low-cost producers are found at every size. The 2020 ERS report made the same point: some farms in each size class are profitable, and weather, location, physical infrastructure and management all affect a dairy farm's finances.

Photo: USDA / Wikimedia Commons (public domain)

Sources: USDA Economic Research Service (Amber Waves, 23 February 2026), USDA ERS report Consolidation in U.S. Dairy Farming (ERR-274, July 2020), US Food and Drug Administration