MegaMilk: Charting Consolidation in the U.S. Dairy Industry
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MegaMilk: Charting Consolidation in the U.S. Dairy Industry

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MegaMilk: Charting Consolidation in the U.S. Dairy Industry

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MegaMilk: Charting the Consolidation of the Dairy Industry

Today’s dairy industry looks very different to how it did just 30 years ago.

Milk production in the U.S. has increased by a whopping 50% over that time frame—yet, the total number of dairy farms has dropped by three-quarters.

Fewer and larger farms now have the lion’s share of all U.S milk cow inventory. While they have the ability to produce more competitively priced dairy products and provide more value to consumers, it is causing financial devastation for small farmers.

The graphic above uses data from the USDA to chart the rapid consolidation of the American dairy industry between 1992 and 2017.

The End of the Small Dairy Farmer?

In the U.S., the dairy industry is one of the fastest consolidating industries in comparison to almost all other agricultural sectors.

Between 1992 and 2017, small commercial farms with 10-99 cows saw an average decline of 70%. These farms accounted for 48.5% share of all U.S. milk cows in 1992. In 2017, that number stood at just 12.2%.

Over time, small farm production has been replaced by that of bigger and more consolidated “megafarms”—a move that can be attributed to the many benefits that scale brings, such as lower costs of production and the potential to compete in the international market.

 Share of U.S. milk cow inventory (by year)
Herd size199219972002200720122017
1-9 milk cows0.9%0.7%0.6%0.4%0.4%0.4%
10-49 milk cows19.5%13.8%9.2%6.8%5.9%3.6%
50-99 milk cows29%24.5%19.1%13.8%11.1%8.6%
100-199 milk cows19%18%15.4%12.8%10.6%9.4%
200-499 milk cows13.7%15.3%14.7%13.8%12%12%
500-999 milk cows8%10.2%12.2%12.5%11.3%10.7%
>999 milk cows9.9%17.5%28.8%39.9%48.7%55.2%
Total 100%100%100%100%100%100%

The Need For a Survival Strategy

While small dairy farmers simply cannot keep up with larger farms encroaching on their turf, they also have fluctuations in dairy prices to contend with. Milk prices fell in 2018, narrowing the gap between milk prices and feed costs so much that another wave of farm closures ensued.

To make matters worse, many small dairy farmers are close to retirement age, and according to the USDA, exits are more likely if the farm operator is 60 or older.

Despite the hardship facing small dairy farmers, analysts suggest that consumer backlash against large-scale production could present opportunities for small dairy farmers to create premium artisanal products. However, such initiatives would be entirely dependent on the state of the economy and where consumer’s values lie.

The Wider Implications

With milk production shifting to larger farms, a range of both direct and indirect impacts are being felt across the country.

For example, milk production is now predominantly focused in fewer states such as California and Wisconsin, which together accounted for almost 33% of all U.S. milk production in 2018.

In larger farms, the herds are typically confined to tight spaces— rather than grazing in pastures—making animal welfare an issue for many of these farms. Concern over waste contamination and air pollution also brings the environmental sustainability of larger farms into question as they come under more pressure to reduce their impact on the planet.

Changing Tastes

Looking beyond the production of milk, changing consumer preferences could result in the most transformative effects on both large and small scale dairy farmers.

While rising populations are increasing the demand for dairy, per capita milk consumption declined by 24% between 2000 and 2017 in the United States. Consequently, the largest dairy producer in the country, Dean Foods, filed for bankruptcy in 2019, followed by another major milk producer, Borden Dairy, just two months later.

Experts claim that changing consumer preferences, along with competition from other beverage categories, are responsible for 90% of the total dairy decline.

No Country for Old Farms

The confluence of changing economics and an aging population of farmers has brought the U.S. dairy farming industry to a tipping point, and the near future is likely to bring a fresh wave of dairy farm closures.

I don’t see anything that would give them hope at this point. The best advice I can give to these folks, dairy farmers, is to sell out as fast as you can.

– Joe Schroeder, Farm Aid

As smaller farms continue to disappear from America’s rural landscape, the impacts of consolidation will not only affect dairy farmers, but entire rural communities too.

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Agriculture

What’s Behind The Rise Of Food Prices?

Many variables contribute to the rising cost of global food. Let’s take a look at two major factors influencing food prices in recent years.

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The following content is sponsored by Brazil Potash


The Rise Of Food Prices

The World Food Price Index reached an all-time high in March 2022 before gradually falling for nine months to December 2022. But what caused this surge?

There are many variables contributing to the rising cost of global food, but supply chain disruptions and climate change are two major drivers for the spike in prices over the most recent years.

The above graphic from Brazil Potash explores how these two factors are contributing to the most recent rise in food prices.

1. Supply Chain Disruptions

The COVID-19 pandemic and Russia’s invasion of Ukraine have caused major disruptions to global food systems, altering trade patterns, production, and consumption of commodities.

The pandemic placed unprecedented stress on global food systems through a variety of factors, including a change in consumer food consumption, workforce restrictions, and trade pattern disruptions, causing food prices to rise.

Then, on February 24, 2022, Russia invaded Ukraine, blocking vital exports of commodities for international food systems, and causing a sharp spike in food prices.

Ukraine was the fourth largest global exporter of cereals before the invasion. Combined, Russia and Ukraine export around 28% of the world’s wheat and 15% of its maize.

Simultaneously the fertilizer industry has also felt the strain, with the trade of essential fertilizers for crop production impacted by both the COVID-19 pandemic and the war in Ukraine.

2. Climate Change

As global temperatures rise and weather patterns become more unpredictable, we are seeing an increase in extreme weather events that are having a devastating effect on crops around the world.

India’s rice crop fell by around 8% in 2022 due to a lack of rainfall, while drought conditions in the EU have resulted in grain yields that are approximately 16% below the five-year average.

According to NASA, if greenhouse gas emissions continue to rise at the current rate, maize yields are projected to decline by 24% by 2030, in contrast, wheat may rise by around 17%.

The below video details NASA predictions for maize yields.

Weather conditions have a direct impact on crop production, which in turn affect food prices.

The Role of Fertilizer

Rising food prices are a concern as they directly impact food security. When prices rise, it becomes more difficult for people to afford enough food to meet their needs. This can lead to hunger, malnutrition, and social and political instability.

There are steps that can be taken to mitigate the effects of rising food prices, such as increasing and diversifying the global fertilizer supply. Diversifying the fertilizer supply can alleviate pressure caused by supply chain disruptions.

Additionally, using fertilizers that improve plant resistance to environmental stress factors such as drought and can help to increase crop yields.

Brazil Potash will produce a vital crop nutrient that improves plant resistance to environmental stress factors such as drought, enabling greater yields to feed a growing population.

Click here to learn more about fertilizer and food production in Brazil.

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