Dairy Farm Exits Accelerate in 2020
February 24, 2021
Dairy farms continued to exit the industry at a rapid rate last year. According to USDA’s latest Milk Production report, the number of licensed U.S. dairy farms fell 7.5% to 31,657 herds, a reduction of 2,500 herds. That’s well above the average annual decline of 5% seen over the past 10 years. At the same time, a year-over-year increase of 0.5% in national cow numbers means the average herd size grew from about 273 cows in 2019 to 297 head in 2020.
Dairy farm numbers did not increase in any state and held steady in only 11, but most of these states were fairly minor dairy states. Only four—Arizona, Colorado, New Hampshire, and New Mexico—had 100 or more licensed herds at the start of last year.
The largest drop in dairy farm numbers occurred in regions and states that have long posted sharp declines. Eleven states recorded drops of 10% or larger, but only one, Minnesota, was a top-10 milk producing state. Minnesota’s herd numbers fell 13.9%, compared to the state’s 10-year annual average decline of 6.4%. Five states with losses of 10% or more were in the Southeast, with South Carolina posting the steepest cutback in the nation, down more than 22%, compared to its 10-year average decrease of 8.5%. Several states in the both the Northeast and Central Plains also recorded large reductions.
California, the nation’s largest milk- producing state had 40 fewer herds at the end of last year, compared with a year earlier. California’s 3.2% drop was comparable to its 10-year average loss of 3.4%. In Wisconsin, the second largest dairy state, producers liquidated 610 herds, a 7.9% decline, compared to the state’s 10- year average decrease of 5.6%.
This year’s attrition could be even larger. After a brief reprieve, the milk margin above feed costs is once again tightening. With feed prices reaching historical highs and milk prices set to shrink without additional government spending on dairy products, the economic squeeze could prove too much those barely hanging on now.