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New Plant Capacity Collides with Shrinking Milk Supply

For the past few years, some U.S. dairy producers have been urging the dairy industry to build new processing facilities so they can expand their operations and have a place to sell their additional milk. Their requests are now becoming a reality, but the timing appears to be challenging, said Betty Berning, analyst with the Daily Dairy Report.

“Scarce heifer supplies and the time required to raise a calf to mature milk cow remain long-term barriers to rapid growth in U.S. milk output.” Berning said. “At the same time, milk supplies are shrinking in some of the areas that have been experiencing the largest investments in processing capacity.”

In January, the U.S. milk herd was at its lowest point in more than four years, and heifer inventories were at their lowest level since 2004. Milk will remain particularly tight in the Southwest. New Mexico’s herd and resulting production, for example, have been rapidly declining for several years. New Mexico’s milk cow herd has fallen by 97,000 head between January 2021 and January 2024, according to USDA data. In neighboring Texas, a state that had been growing exponentially, milk cow numbers have been flat since June 2023 at 635,000 head, down from the state’s peak of 650,000 in March 2023.


March 22, 2024


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