Challenges and opportunities for the US dairy sector in 2025
While the US dairy sector is poised for a positive year ahead, many challenges remain. This article will summarise the main opportunities and risks for the US industry as 2025 kicks off.
Risks: payment schemes, deportation, tariffs, replacement heifers, bird flu
- The federal ‘Milk Marketing Order’ payment scheme for dairy producers is being reformed to improve ‘make allowances’ for dairy processors. However, it’s estimated that the proposed reform may cost farmers profits.
- President-Elect Trump’s plans for mass deportation of illegal migrant workers will cause dairy farmers to lose a key source of labour unless thousands of workers are rapidly made legal.
- A trade war is on the table between the US and Mexico/Canada, which is certain to disrupt the US dairy industry. If tariffs are placed on incoming goods, reciprocal tariffs are likely to be applied to dairy products and more.
- The shortage of replacement dairy heifers in herds across the nation is dire.
- Bird flu, or highly-pathogenic avian influenza, continues to affect the US dairy sector. In California, there are currently over 500 herds affected. On 18 December, California’s governor Gavin Newsom proclaimed a State of Emergency to accelerate expanding monitoring and to build on the coordinated state-wide approach to contain and mitigate the spread of the virus. Dairy farmers are advised to use mineral packages in their cows’ diets to help boost the immune system.
Opportunities: consumer demand, record trade, organic dairy
- Consumer demand for all kinds of dairy products is up – even for whole fluid milk, which has experienced decades of decline. The most recent USDA Milk Production report shows that overall milk production across the 24 major states has increased for much of 2024 over 2023.
- US dairy exports to Mexico are approaching record levels. As one media outlet reports, “Mexico is the leading export market for US dairy products[…]. While milk production in Mexico has grown annually since 2011, it hasn’t been enough to keep pace with surging demand. Dairy product consumption in Mexico has increased by 50 pounds per capita since 2011.” According to a new report from consulting and research firm CoBank’s Knowledge Exchange, growing exports to Mexico and other countries will support long-term growth in the US dairy industry.
- Trump is expected to back rules governing the integrity of the US organic dairy sector, which the Biden administration failed at, say some in the industry.
Neutral, positive or negative?
President-elect Donald Trump has plans to scrap all national agricultural ‘check-off’ programmes which support sector research and promotion. This is seen as a positive move by some in the dairy industry who do not view federal programmes as being effective and point out that state ‘check-off programmes’ already exist.
However, Dairy Checkoff leaders note that 2024 initiatives successfully increased dairy access in schools, expanded market share for US dairy products domestically and internationally and supported the industry’s longstanding commitment to sustainability. Recently, the Checkoff also unveiled its InnovateWithDairy tool.
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