Dairy industry faces many concerns going into 2025

PAOLI ‒ As the old saying goes, farmers have the most control when it comes to what’s inside their own fence line. But there are plenty of factors for today’s dairy farmers outside their fences. Pete Hardin, a dairy journalist for 50 years, who edits and publishes a dairy publication called The Milkweed, spoke to a group of dairy farmers in Paoli recently, highlighting his insights heading into 2025.

About 25 dairy farmers and their advisors attended the meeting. The group convenes several times each winter at a local town hall in southern Dane County to share their views on issues in the dairy industry. They have gathered each winter for many years, jokingly calling their lunchtime get-togethers “Paoli University” or PU.

Among the current concerns Hardin spoke about – cheddar supply and demand pricing issues – important in Wisconsin because 90 percent of Wisconsin’s farm milk goes into cheese. “The price of Cheddar makes or breaks our prices.” Another concern is bird flu, which has not been found on Wisconsin’s dairy farms but is decimating California herds; and federal Milk Marketing Order reform which is designed to improve “make allowances” for dairy processors.

But Hardin calls it “deform not reform” as he estimates it will cost Wisconsin farmers 85 cents per hundredweight – a substantial loss to dairy farmers. Additional dollars for make allowances are assigned before the price to farmers is calculated.

Earlier this year, University of Wisconsin dairy economists Mark Stephenson (retired) and Chuck Nicholson reported to the Wisconsin Cheesemakers Association that the reforms would cost state dairy farmers 15 cents per hundredweight in 2025.

“I do not know where the UW economists got this 15-cent figure. I think it’s going to be a lot higher,” Hardin said.

Dairy co-ops in the Upper Midwest want to keep the milk order and most will likely bloc vote “yes” in the name of their members, but Hardin thinks that the Upper Midwest is one region of the country that could do fine without a FMMO.

“Do we even need a federal milk order in the Upper Midwest? We do not. States would quickly step in and perform the functions that would result from the FMMO’s disappearance,” he said. Of all the regions, he feels that the Upper Midwest could be the most likely to do without the order system.

Because Cheddar cheese is so crucial to the milk pricing system, Hardin keeps a close eye on it.

“The situation now – supply and demand are being ignored. We’re talking about tens of millions of dollars evaporating. Traders and investors rode prices up and then down. I was very optimistic about milk prices a few months ago but that optimism remains unfulfilled.,” he said.

Trade wars, undocumented workers have dairy farmers worried

With an incoming U.S. President who has said he will deport undocumented foreign-born workers, dairy farmers may lose a key source of labor on their farms. A Wisconsin estimate found that as many as 70 percent of all the hired labor on dairy farms may be undocumented. Hardin also noted that a great many workers in food processing plants across the country may fall into the category of “undocumented” or “illegal” immigrants.

“What happens on your farms if all those workers get deported?” he said.

Hardin said he is concerned about the threat of trade wars with our most important dairy trading partners – Mexico, Canada and China.

“If we put in tariffs we will be looking at reciprocal tariffs and that will hurt dairy. Agriculture needs to puzzle about what will be the impact if that happens,” he said.

Will Trump scrap ag check-off programs?

The dairy editor agrees with one thing in “Project 2025” – a road map for a second Trump presidency. It suggests scrapping all agricultural check-off promotion programs.

“I would argue that at a national level the dairy checkoff is a failing program. In the state of Wisconsin, I would give our dairy promotion program an A-minus or a B-plus. If the national one disappears, the state program would take over,” he said.

The dairy checkoff was created by Congress but dairy farmers have not been given the chance to vote with a “one farmer, one vote” referendum on whether or not to keep those programs, he added.

“The new administration promises to shake things up – we’ll see what happens.”

Hardin said he will watch to see if the Trump Administration will do a better job of backing rules governing dairy’s organic integrity, something he said the Vilsack-led USDA did not do.

Prices for dairy livestock continue to skyrocket

Hardin highlighted skyrocketing values for dairy cows and heifers as the country faces a shortage of animals to replenish dairy herds. One thing that has contributed to this shortage is that over the past few years, farmers have increasingly bred some of their cows with Black Angus or other beef semen.

This has meant a diminished number of purebred dairy heifers that are available as herd replacements. Farmers’ intention in doing so has been to create another income stream. The value of these crossbred black calves has been high – as much as $800 to $1,000 for a week-old calf – because of a diminished herd in the beef cattle sector.

Beef cow and heifer numbers have been driven down substantially due to several years of drought in the Great Plains and Southwest that forced many ranchers to sell their female animals for slaughter rather than retaining them to produce the next generation of beef calves.

“The shortage of dairy livestock is dire and getting more dire,” he said. A source in the cattle industry tells Hardin that farmers are paying $3,400 to $4,000 for grade dairy heifers. “Dairy replacements are very scarce.”

Given this scarcity and expense of dairy replacement heifers, farmers should do all they can to extend the working life of their dairy cows, he added. Hardin advised farmers to quit using Angus semen on their cows and once again breed to produce dairy heifers.

Thoughts on bird flu in dairy herds

He also advised dairy farmers to religiously continue to use mineral packages in their cows’ diets, especially those that include zinc and vitamins A, D and E, which help boost the immune system.

“According to nutrition experts that I have talked to, that is your best insurance against bird flu,” he said.

In California, where bird flu impacting dairy herds, cows suffered terrible heat stress during the summer and then again in September. On top of the heat stress that the cows experienced, many farmers backed off the mineral packs in their rations just as bird flu arrived.

Around Labor Day, California had only three herds affected with bird flu – the highly pathogenic avian influenza or HPAI – and by Oct. 1, 45 herds were affected. That number jumped to 137 herds on Nov. 8 and by December there were over 500 herds confirmed to have bird flu.

While affected farms can still ship milk because pasteurization kills the HPAI virus, the farms are quarantined for a minimum of 30 days. Death losses must be composted or buried on the farms and culls cannot be shipped; there are widespread abortion problems as well as lost milk production.

“We cannot appreciate the hell those farmers are going through,” he said.

Longer-term, he predicts a significant loss of milk production in California and once the quarantines are lifted (when milk samples test negative for the live virus) there will be large groups of cull cows that will likely overwhelm the slaughterhouses in California.

If his dire predictions are borne out and California dairies drop significantly in production, Wisconsin may once again become the nation’s top dairy production state or at least tie with the West Coast rival – as long as bird flu doesn’t rear its ugly head in America’s Dairyland.

Consumers demanding all kinds of dairy products

These concerns on dairy farms are happening against the backdrop of the “best consumer demand metrics” Hardin has seen in his career of observing the dairy industry. Consumer demand for all kinds of dairy products is up – even for whole fluid milk – an uptick counter to decades of decline.

“Organic whole milk is up 12-13 percent. I’ve never seen demand like this before and it all boils down to protein,” he said.

“Americans are realizing the importance of protein in their diets and are recognizing that dairy products are a key source of that protein,” he added. “It’s been a long time since consumer demand for fluid milk has ticked up over the previous year, but that’s what we’re seeing. The demand for “fairlife” products has been increasing year after year after year. The increase in consumer demand for organic whole milk has also been spectacular. Now there’s a shortage of organic milk.”

Cottage cheese production and consumption are both up and yogurt demand and production are up.

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