Clark Farms Creamery is a multigenerational dairy farm, that milks around 230 head Holstein Heifers in Delhi, New York.<br />(USDA/FPAC photo by Preston Keres)

USDA/FPAC photo by Preston Keres

An $8 billion investment in dairy processing capacity will come online this year which will expand production on products from cheese to ice cream. University of Wisconsin Extension dairy market and policy outreach specialist Leonard Polzin says that increased milk supply at the farm level aligns with the rising demand for processing. There are market uncertainties which include storage challenges and demand fluctuations.

The USDA National Agriculture Statistics Service reported the August 2024 milk cow herd at 9.365 million head. This was an increase of 10,000 from October 2023. U.S. milk production is projected to rise by 102 pounds per cow in 2024. The average price of milk for 2024 is projected to come in at $1.74 per hundredweight. This is an 8% increase from 2023.

Although milk prices are expected to dip in 2025, this will be offset by lower feed costs. The economic outlook for the industry remains strong, driven by domestic demand and growing export potential. Economic costs are projected to be slightly below 2025 total returns. This would be the first time in the last 10 years this occurred.

Domestic dairy consumption hit a 60-year high, while international exports, particularly to Mexico, are nearing record levels. Production constraints in the European Union and New Zealand may enhance the U.S.’s competitive edge. Proposed USDA reforms aim to modernize milk pricing, with risk management strategies becoming increasingly critical for dairy farmers.

Read more on the 2025 dairy outloook here.