The consolidation of farms and more cows in the United States has been continuing for decades. But the trend towards less, larger farms is now fundamentally changing market dynamics.
Duyarlı The new reality is a milk supply that is less sensitive to short-term price shocks, because this is due to large operations that can withstand lower prices, id said Ben Laine, senior dairy economist at CoBank's Information Exchange Division.
"Smaller dairy farms find it almost impossible to compete against their larger counterparts in the commodity milk market, so they have to quit the job or find a niche market of higher value."
Laine says the consolidation effect is self-sustaining.
Larger dairies are in the best position to continue producing milk during price decreases, which keeps prices down and presses on more expensive, smaller dairies.
The industry becomes more demand-dependent because it does not contract the industry by providing fewer cows. And that's exactly what is in the current price cycle. Milk prices were preparing to increase in the second half of 2018, but retaliatory prices from Mexico and China met the demand for US dairy products.
The scope of milk consolidation has been known for some time. When the latest Census data was published in 2012, large farms, defined as having 1,000 cows or more, accounted for the 47 cc of the country's cows.
However, as these operations received more milk per cow, they produced more than 50 thousand in milk.