State of the Dairy Industry

The dairy industry in the US is in a period of economic volatility of historic proportions. An era of modest fluctuation in milk and feed pricing from the late 1990s to the early 2000s was followed by previously unseen increases in milk prices. The period of high dairy profitability in early 2008 was soon dampened as the global recession of 2008–2009 led to decreased exports.

Since 2009, milk prices have rebounded and dropped several times. All-time high US milk prices in 2014 were followed by 5 years of a severe, industry-wide economic downturn. From 2017 to 2019, the number of licensed dairy farms in the US declined by 15%, reflecting economic pressures associated with low milk prices and a narrowing margin between milk prices and feed costs (1). In response, Congress revised farmer premium requirements, expanded coverage under the primary federal dairy support program (Dairy Margin Coverage), and modified several other dairy-related programs (MacDonald et al., 2020).

The causes of the US dairy industry's downturn are numerous; the essential reason, though, was an excess supply of milk versus demand. Because of dramatic improvements in dairy reproduction, genetics, nutrition, and overall management, US milk production has increased markedly. Simultaneously, US milk consumption has continued to decline, and US milk exports have fallen dramatically.

In March 2015, the EU outlawed milk production quotas that had been limiting production in member states. In 2017, trade wars with Europe and China led to additional decreases in exports. In 2019, prices began to rebound, perhaps reflecting the effects of the closure of many US dairies.

After Mexico, Canada is the second-largest export market for US dairy products, and in 2018, the renegotiation of the North American Free Trade Agreement (NAFTA) into the United States–Mexico–Canada Agreement (USMCA) expanded US access to the Canadian dairy market. In 2024, the US exported $879 million in dairy products to Canada—a 71% increase since 2021 (2).In 2026, however, the future of this market relationship is uncertain because of tariff and trade disputes between the US and Canada.