Milk Production Continues Shifting to Large-Scale Farms

By MacDonald, James; Newton, Doris | Amber Waves, December 2014 | Go to article overview

Milk Production Continues Shifting to Large-Scale Farms


MacDonald, James, Newton, Doris, Amber Waves


Production has shifted to larger farms in most agricultural commodity sectors over the last two decades. This consolidation has contributed to productivity growth in agriculture, leading to lower commodity and food prices and reducing total resource use in food and fiber production. As consolidation reduces the farm population, it also makes starting small and mid-sized farming operations more difficult. This is especially true for dairy farms, where a major transformation of the sector has reduced the number of dairy farms by nearly 60 percent over the past 20 years, even as total milk production increased by one-third. Recent results from the Census of Agriculture and the Agricultural Resource Management Survey (ARMS) detail how and why the structure of dairy production has changed.

The mean herd size on dairy operations rose from 61 cows in 1992 to 144 in 2012, but that shift understates the nature of the change in dairy production; most cows are now on farms that are much larger than the mean. The midpoint farm size is used to track cows; the midpoint shows the herd size at which half of all cows are in larger herds and half are in smaller herds. In 1992, the midpoint of 101 cows was not much larger than the mean, reflecting the fact that most cows were on small and mid-size dairy farms. However, the midpoint rose sharply over the next two decades, to 900 cows by 2012, over 6 times larger than the mean herd size.

The sharp upward trend in the midpoint reflects changes at the extremes of farm sizes. In 2012, there were still nearly 50,000 dairy farms with fewer than 100 cows, but that represented a large decline from 20 years earlier, when there were almost 135,000. Over the same period, the number of dairy farms with at least 1,000 cows more than tripled to 1,807 farms in 2012. Movements in farm numbers were mirrored by movements in cow inventories. Farms with fewer than 100 cows accounted for 49 percent of the country's 9.7 million milk cows in 1992, but just 17 percent of the 9.2 million milk cows in 2012. Meanwhile, farms with at least 1,000 cows accounted for 49 percent of all cows in 2012, up from 10 percent in 1992.

The shift to larger dairy farms is driven largely by the economics of dairy farming. Average costs of production, per hundredweight of milk produced, are lower in larger herds, and the differences are substantial. These costs include the estimated costs of the farm family's labor as well as capital costs, in addition to the cash expenses that are included under operating costs. …

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