There’s a dearth of dairy replacements in the countryside. Dairy farmers began to understand that market reality in September 2023. As a result, U.S. dairy producers have sent fewer cows to slaughter for 46 consecutive weeks dating back to September 3, 2023, in order to preserve dairy cow numbers.

From January 1, 2024, to July 6, 2024, U.S. dairy farmers sent 259,400 fewer head to slaughter, based on data from USDA’s Agricultural Marketing Service. When counting the trend that started unfolding last September, that number expands to a whopping 397,200 head. Culling has pulled back so much in the western U.S. that early July data indicates a 20-year low in volume.

No near-term reversal

That pullback on culling marks a dramatic downturn when compared to the four-year national trend as shown in the graph. This development is largely due to the beef-on-dairy market that has been delivering more cash flow to dairy farmers. That revenue stream keeps growing as the nation’s beef producers are receiving record prices for their cattle.

In 2017, the nation’s artificial insemination studs collectively sold 2.5 million units of beef semen nationally. By 2023, that sales number catapulted 276% to 9.4 million units. A previously unfathomable 7.9 million units were sold to dairy farmers, reported the National Association of Animal Breeders, as prices for dairy-beef calves keep climbing.

These days, there are between 3 million and 3.25 million animals from a beef sire and a dairy dam now in the U.S., estimated Dale Woerner of Texas Tech University. While that’s good news for a beef sector that has the lowest feeder supplies since 1972, it has sent shockwaves through dairy replacement inventories.

As a result, dairy heifer replacements available to take the places of cows leaving the herd have tumbled to a 20-year low. This inventory scarcity has pushed dairy heifer replacement values past the $3,000 mark at multiple auction markets across the country.

This trend in beef-on-dairy shows no signs of slowing as week-old calves are fetching between $800 to $1,000 per head, which is double the price for the best purebred dairy bull calves. Given these high values for beef-on-dairy calves and the nearly three-year cycle from conception of a heifer until it has its first calf, this situation shows no signs of near-term reversal.

In the meantime, those dairy farmers with expansion plans have begun to purchase more gender-sorted dairy semen to plan the next crop of replacements. In 2023, 54% of all dairy bull semen sold in the U.S. was sorted to make a heifer calf. That was up 5% from the prior year. Like the beef-on-dairy trend, sales of gender-sorted dairy bull semen show no signs of slowing, either.