CoBank said a shortage of replacement heifers may limit milk production in the United States over the next three years.
There has been “a sharp decline” in the number of dairy heifers, down by 15 per cent in the last six years to a 20-year low.
“While the global demand outlook for U.S. dairy products remains murky due to export market uncertainties, any potential growth opportunities may be stymied by an inability to expand U.S. milk production.” Co Bank said.
The shortage is partly because of a declining beef population and dairy farmers choosing to mate cows to beef bulls.
“Raising dairy heifers has been a losing proposition for most farmers in recent years, to the tune of $600 - $900 per animal,” said Corey Geiger, lead dairy economist for CoBank.
“To better manage on-farm heifer inventories, dairy farmers have turned to using beef semen on a portion of their dairy herd to reduce the number of replacement heifers. That’s enabled farmers to cut the costs associated with raising heifers and generate additional income from beef sales.”
“Less than a decade ago, dairy heifers sold for a tidy profit, but rearing costs today mean they sell at a loss,” he said.
Penn State Extension specialists calculated heifer rearing costs averaged $2,034 while the United States Department of Agriculture reported the average price for replacement heifers from 2018 to 2022 was $1,400.
The steep drop in heifer supply went largely unnoticed until recently, when dairy farmers went looking to buy now-scarce replacements. As a result, dairy replacement prices have now jumped to an eight-year high, with USDA data and auction market reports ranging from $1,890 to $2,800 per head.
These higher replacement values will likely be in place for the foreseeable future given the tight supply, CoBank said.
Geiger said the shrinking replacement pipeline will impact the ability to grow U.S. milk production for some time.
“Even if dairy producers reverse course and use more dairy bull semen in the coming years, it will be two to three years before the resulting dairy calves even reach the milking barns,” he said.