How tight are dairy heifers and herd replacements?
The U.S. dairy industry may be short nearly 500,000 dairy replacements, and that’s driving heifer sale values to record levels. It’s also causing dairy farmers to be far more frugal on culling activity, even as beef prices hover near record levels.
Doing the math
To arrive at that half million head shortfall, two USDA reports – Milk Production and Actual Slaughter Under Federal Inspection – provide great perspective.
Let’s look at U.S. dairy cow numbers.
In USDA’s most recent October 2024 Milk Production report, the U.S. dairy herd stood at 9.365 million head across all 50 states. When looking back to August 2023, the U.S. dairy herd matched that exact number. On the surface, this points to overall stability. However, while stable in numbers, the U.S. dairy herd is getting older due to its shifting makeup.
When evaluating weekly culling activity in USDA’s Actual Slaughter Under Federal Inspection, dairy farmers have sent 499,110 fewer head to slaughter during the 65-week window starting Labor Day 2023 and going through the week just prior to Thanksgiving 2024. Each of those 65 weeks showed reduced culling . . . a truly historic metric.
Without this pullback in culling from typical trendlines, as shown in the graph, one could theorize that the U.S. dairy cow herd would stand near 8,865,000 head of milk cows. That would be a 5.3% shrink in the herd when compared to August 2023. Could this be possible?
Certainly, improving genetics have been a positive force for dairy cow longevity as the genetic trait “Productive Life” improves with each passing year. Plus, older cows produce more milk, butterfat, and protein than their younger herdmates. On the flip side, these nearly half a million head of dairy cows are now one year older, and older cows have more health challenges, particularly around calving time.
Looking to the future
U.S. dairy farmers can continue this pullback on culling in the near-term to prop up dairy cow numbers. However, at some point, cows get older and must move onto their second life phase and be culled for beef. That precipitates the need for dairy heifer replacements. Rather than paying over $2,000 per head to raise replacement heifers for the two years after they’re born, the high value for calves from a beef sire and a dairy dam will continue pull farmers toward an immediate payout of $600 to $800 per calf instead.
In the meantime, reports of heifers routinely selling for over $3,000 per head and even touching prices at $4,000 will become the new norm as it takes three years from conception before the next generation can enter the milking herd.
The market values and pullback on culling also suggest that USDA will further drop its “milk cow replacements expected to calve” number down further when the federal agency releases its next Cattle report on January 31, 2025. Given this unfolding situation, it’s very likely that the 709,100 head decline in cattle expected to enter the milking herd over the next six years will become a larger number. That also means dairy replacement numbers could move well past a 20-year low, forcing dairy farmers who want to expand to plan three years out and make their own dairy replacements. Results yielded from these decisions will cap the upside for growth in U.S. milk, butterfat, and protein production.
