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.

Texas seems to come to the top of many lists and herd size is another example.  Texas is known for doing things big and the herd size growth of 131% over 10 years is another great achievement.  California is the largest dairy state and has an average herd size of 1544 cows.  South Dakota has grown recently with new and enlarged cheese plants.

The numbers in Table I are the averages for each state.  Many individual herd sizes are significantly bigger.

Table I - Cows per Herd Averages for Listed States

Table II expresses the growth in herd size using milk production instead of cow numbers.  This data set again shows the size of farms in some states that are hugely bigger than the U.S. averages. Increased milk per cow has helped expand the milk per herd as compared to the cow count in Table I.

Table II - Million Pounds of Milk for Listed States

Below are charts of five of the major dairy states showing the change in the number of licensed herds over 20 years.  There are tremendous differences.  Recognizing that fewer but larger herds are a key cost reduction technique for dairy producers, the variation between states shows where potential financial improvements could be made.  Chart I shows the fall from 105,250 licensed herds in 2000 down to just 27,432 in the U.S.

Chart I - The U.S. Transition
in the Number of Licensed Herds

Texas produced 16,530 million pounds of milk in 2022 (Chart II).  They are now down to just 320 herds in the state.  That calculates to the average pounds per herd of 52 million (Table II)..

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Chart II - The Texas Transition
in the Number of Licensed Herds

California is the largest dairy state and produced 41,860 million pounds of milk in 2022 (Chart III). They used milk from 1115 herds to produce this milk which is more than triple the amount from Texas.  The larger number of herds kept the pounds per herd at 38 million, 27% less than Texas.

Chart III - The California Transition
in the Number of Licensed Herds

Wisconsin is the second largest dairy state.  They produced 31,888 million pounds of milk in 2022.  They had 6530 herds producing this volume of milk (Chart IV).  The volume of milk is roughly double the amount produced in Texas.  They used 20 times more herds than Texas to produce that double volume.  That made their pounds per herd 5 million pounds, less than 10% the level of Texas.

Chart IV - The Wisconsin Transition
in the Number of Licensed Herds

Idaho is third largest dairy state and produced 16,584 million pounds of milk in 2022 (Chart V), very close to the amount produced by Texas.  The milk came from 480 herds which is 50% more herds than Texas.

Chart V - The Idaho Transition
in the Number of Licensed Herds

Pennsylvania produced 10,032 million pounds of milk in 2022, less than any of the above states. They used 5000 herds and averaged just 2 million pounds of milk annually per herd.  This difference compared to all the above examples is huge!  

Chart VI - The Pennsylvania Transition
in the Number of Licensed Herds

The point of the above charts is to show that there are changes available to push down dairy production costs and increase revenue through larger herds.  There are major hurdles to make changes from the formats of the past, but it can make a big change in the financially efficiency of producing milk.