USA 08.02.2024

Diminishing Dairy Heifer Supply Raises Concerns Over U.S. Milk Production Growth

Source: The DairyNews
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The dwindling number of dairy heifers in the United States, driven by the rising cost of rearing calves, may pose a significant challenge to the potential growth of domestic milk production in the coming years.
Diminishing Dairy Heifer Supply Raises Concerns Over U.S. Milk Production Growth
Source: freepik.com
Recent data from the USDA's Cattle report indicates a nearly 15% decline in the count of dairy replacement heifers over the last six years, reaching a 20-year low.

CoBank's Knowledge Exchange report emphasizes that the escalating cost of raising heifer calves has outpaced increases in heifer values, prompting farmers to reduce replacement inventories and hindering the expansion of U.S. milk production.

Corey Geiger, lead dairy economist for CoBank, notes that rearing dairy heifers has become economically challenging for farmers, resulting in losses ranging from $600 to $900 per animal. To manage heifer inventories more efficiently, farmers have increasingly used beef semen on a portion of their dairy herd, reducing replacement heifer numbers and cutting associated raising costs. This shift allows farmers to generate additional income from beef sales, given the current high prices for beef cattle and retail beef products.

The University of Wisconsin Extension survey data from 1999 to 2015 highlights a significant increase in the total cost to raise a dairy heifer from $1,360 to $2,510 per head. A Penn State Extension analysis covering 2016 to 2021 estimates heifer rearing costs at $2,034. During the same period, USDA's Agricultural Prices report indicates that the sale price of dairy heifers never exceeded $1,400 per head. This mismatch between rearing costs and sale values has led to a steady decline in replacement heifer numbers.

While some fluctuation in the replacement heifer population is natural, a sufficient inventory is crucial for the continuity and potential growth of U.S. milk production. The current tight supply has driven dairy replacement prices to an eight-year high, ranging from $1,890 to $2,800 per head, according to USDA data and auction market reports. The shortage in replacement heifers is expected to impact the ability to expand U.S. milk production for some time, even if producers alter their breeding strategies.
Aaron Smith
Aaron Smith
Professor of Agricultural and Resource Economics at the University of California
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Dr. Sylvain Charlebois
Dr. Sylvain Charlebois
senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.
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February 2024
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