Consolidation Trend Continues In Dairy Sector

The trend of consolidation of dairy farms over the last two decades has primarily been steady. At the same time, the trend of the number of small dairy operations declining has been steady as well. That’s not surprising information within a recent USDA study of  dairy industry consolidation. Research economist, James MacDonald, said the most surprising data came from outside the dairy sector.

“Production has been shifting to larger farms. but what me mean by larger is what’s really changed over time,” MacDonald noted. “Most cows today are on farms with heard of a thousand or more cows. But where the real expansion is going on is in very large herds. Places with 5,000-10,000, or even up to 30,000 cows in a large site on a dairy farm.”

That’s quite a shift compared to just a decade or two decades ago.

“On average, far more larger farms are able to realize scale economies and lower costs. And so the finances of the business have strongly favored them over the years,” MacDonald said.

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