For the last two years, the dairy industry has been in a relatively good place. However, a downswing in the last half of 2025 is expected to continue into 2026.
Dairy is in a supply-led adjustment, Leonard Polzin, dairy markets and policy outreach specialist at the University of Wisconsin-Madison, said during a webinar Jan. 12, and the mixed market signals have made for tough decisions on the farm.
Dairy producers have seen weak milk and cheese prices, but beef value has overridden milk-price signals.
Beef-on-dairy crossbreeding is the latest step in the evolution of dairy genetics and is now a key driver of the U.S. supply of both beef and dairy cattle.
Brent Pollard and his wife Carrie of rural Rockford, Illinois, milk 70 cows. He said 2015-20 was a rough time for the industry, but he is optimistic now that things will stay strong.
“The bright spot has been the beef market,” he said. “I don’t see that going into a downturn.”
Dairy product processing is also undergoing major expansion, which will influence the growth of the dairy herd.
Polzin said more than $7 billion in processing expansion is anticipated to occur from 2023-28.
Historically, milk production would increase about 1.5% per year and processing would increase following that, but he anticipates a decades’ worth of processing expansion will be compacted into half that time.
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