Size Matters - Where are the Biggest Producers?
The last post covered the stagnation of producer milk prices. At the end of that post was a list of things producers have used to lower costs and improve revenue such as improved components, higher milk yields, better feed formulation, and larger operations. There is very little published about the gains from increased size. This post will cover where and by how much producer operations have increased to deliver a lower cost and increase revenue on a dairy farm. The analytics are based on "licensed to sell milk" farms.
The tables below define where dairy operations are growing. Since the year 2000, dairy "farms" have grown from an average of 88 cows per farm to 337 cows per farm, an increase of 383%. The number of farms have decreased from 105,250 to 27,932 a drop of 73%. Why is this happening? Economic pressures have forced producers to find ways to lower costs and increase revenue and a larger herd can produce more milk and reduce the full cost per cwt. of milk.
The bottom row of Table I shows where the U.S. is in cows per farm over the last 10 years. The states listed in Table I are listed by the average size of the current herds. New Mexico has been known for their large herds and at the end of 2022, they averaged 2655 cows per herd. While New Mexico producers have run into some environmental problems, their operations are still very large. Comparing the 2655 average in New Mexico to the national average of 337 cows per herd, shows what is possible. The fluid milk states like Arizona and Florida are also increasing herd sizes and smaller producers are exiting as fluid milk sales decline.
July 16, 2023