Dairy Industry Grapples with Challenges as 2025 Approaches
Source: DairyNews.today
The U.S. dairy sector is confronting a range of pressing challenges as it heads into 2025, from volatile cheddar pricing and federal regulatory reforms to labor shortages and the escalating impact of bird flu.
Peter Hardin, a seasoned dairy journalist with five decades of experience, outlined these concerns during a recent meeting with dairy farmers in Paoli, Wisconsin.
Cheddar Pricing Woes Impact Wisconsin Farmers
For Wisconsin, where 90% of milk is processed into cheese, the pricing dynamics of cheddar are critical. “The price of cheddar makes or breaks our prices,” Hardin emphasized. He expressed frustration over current market conditions, noting that supply and demand fundamentals are being overlooked, leading to significant price volatility.
“Tens of millions of dollars are evaporating as traders and investors manipulate prices,” Hardin said. While he was optimistic about milk prices earlier this year, that optimism has since faded.
Federal Milk Marketing Order Reforms Under Scrutiny
Reforms to the Federal Milk Marketing Order (FMMO) are another contentious issue. While these changes aim to adjust "make allowances" for dairy processors, Hardin criticized them as detrimental to Wisconsin farmers, estimating a loss of 85 cents per hundredweight of milk—far higher than the 15 cents projected by University of Wisconsin economists.
“Do we even need a federal milk order in the Upper Midwest? We do not,” Hardin argued, suggesting that state-level systems could replace federal oversight in the region.
Labor Shortages Threaten Farm Operations
Labor shortages, exacerbated by the potential deportation of undocumented workers, pose a severe threat to dairy operations. An estimated 70% of hired labor on U.S. dairy farms is undocumented, according to industry studies.
“What happens on your farms if all those workers get deported?” Hardin asked, highlighting the potential ripple effects across both farms and food processing facilities.
Bird Flu Adds to California Dairy Woes
The highly pathogenic avian influenza (HPAI) is wreaking havoc on California dairy herds, with over 500 herds affected by December. Farms have faced quarantines, significant milk production losses, and logistical challenges in handling dead livestock.
While Wisconsin dairy farms have so far been spared, Hardin warned of the dire consequences if the outbreak spreads. California’s struggles could also shift the balance of U.S. dairy production, potentially positioning Wisconsin as the nation’s top producer.
Scarcity of Dairy Replacement Heifers Drives Costs Up
A nationwide shortage of replacement dairy livestock is further compounding challenges for farmers. Over the past few years, many farmers have opted to breed dairy cows with beef semen to capitalize on high beef calf prices, resulting in fewer purebred dairy heifers.
“The shortage of dairy livestock is dire and getting worse,” Hardin said, noting that prices for replacement heifers have soared to $3,400–$4,000 per animal. He urged farmers to return to breeding for dairy replacements and to focus on extending the productive lifespan of their current herds.
Consumer Demand Offers a Silver Lining
Despite these challenges, Hardin pointed to surging consumer demand for dairy products as a rare bright spot. Sales of organic whole milk, cottage cheese, yogurt, and premium products like “fairlife” milk have all seen substantial growth.
“Americans are realizing the importance of protein in their diets and are turning to dairy as a key source,” Hardin said. Demand for organic milk, in particular, has skyrocketed, leading to supply shortages in the category.
Outlook for 2025
While consumer demand metrics are promising, the dairy industry faces significant hurdles, from market instability to regulatory challenges and disease outbreaks. Hardin’s insights underscore the need for strategic adjustments to navigate the uncertainty ahead. As 2025 approaches, the resilience of the dairy sector will be tested on multiple fronts.
Cheddar Pricing Woes Impact Wisconsin Farmers
For Wisconsin, where 90% of milk is processed into cheese, the pricing dynamics of cheddar are critical. “The price of cheddar makes or breaks our prices,” Hardin emphasized. He expressed frustration over current market conditions, noting that supply and demand fundamentals are being overlooked, leading to significant price volatility.
“Tens of millions of dollars are evaporating as traders and investors manipulate prices,” Hardin said. While he was optimistic about milk prices earlier this year, that optimism has since faded.
Federal Milk Marketing Order Reforms Under Scrutiny
Reforms to the Federal Milk Marketing Order (FMMO) are another contentious issue. While these changes aim to adjust "make allowances" for dairy processors, Hardin criticized them as detrimental to Wisconsin farmers, estimating a loss of 85 cents per hundredweight of milk—far higher than the 15 cents projected by University of Wisconsin economists.
“Do we even need a federal milk order in the Upper Midwest? We do not,” Hardin argued, suggesting that state-level systems could replace federal oversight in the region.
Labor Shortages Threaten Farm Operations
Labor shortages, exacerbated by the potential deportation of undocumented workers, pose a severe threat to dairy operations. An estimated 70% of hired labor on U.S. dairy farms is undocumented, according to industry studies.
“What happens on your farms if all those workers get deported?” Hardin asked, highlighting the potential ripple effects across both farms and food processing facilities.
Bird Flu Adds to California Dairy Woes
The highly pathogenic avian influenza (HPAI) is wreaking havoc on California dairy herds, with over 500 herds affected by December. Farms have faced quarantines, significant milk production losses, and logistical challenges in handling dead livestock.
While Wisconsin dairy farms have so far been spared, Hardin warned of the dire consequences if the outbreak spreads. California’s struggles could also shift the balance of U.S. dairy production, potentially positioning Wisconsin as the nation’s top producer.
Scarcity of Dairy Replacement Heifers Drives Costs Up
A nationwide shortage of replacement dairy livestock is further compounding challenges for farmers. Over the past few years, many farmers have opted to breed dairy cows with beef semen to capitalize on high beef calf prices, resulting in fewer purebred dairy heifers.
“The shortage of dairy livestock is dire and getting worse,” Hardin said, noting that prices for replacement heifers have soared to $3,400–$4,000 per animal. He urged farmers to return to breeding for dairy replacements and to focus on extending the productive lifespan of their current herds.
Consumer Demand Offers a Silver Lining
Despite these challenges, Hardin pointed to surging consumer demand for dairy products as a rare bright spot. Sales of organic whole milk, cottage cheese, yogurt, and premium products like “fairlife” milk have all seen substantial growth.
“Americans are realizing the importance of protein in their diets and are turning to dairy as a key source,” Hardin said. Demand for organic milk, in particular, has skyrocketed, leading to supply shortages in the category.
Outlook for 2025
While consumer demand metrics are promising, the dairy industry faces significant hurdles, from market instability to regulatory challenges and disease outbreaks. Hardin’s insights underscore the need for strategic adjustments to navigate the uncertainty ahead. As 2025 approaches, the resilience of the dairy sector will be tested on multiple fronts.
