Declining replacement heifers raise concern for milk supply
The US dairy industry is facing a significant challenge as the number of replacement heifers has fallen to its lowest point in 20 years. A new report from CoBank suggests that inventories could shrink further before a recovery begins in 2027. This shortage comes at a critical time, as $10 billion worth of new dairy processing plants are scheduled to come online over the next two years.
The decline in heifers is linked to shifts in cattle markets. Record high beef prices and tight cattle supplies led many dairy farmers to breed more calves for beef feedlots instead of the dairy herd. At the same time, raising dairy heifers became unprofitable due to high costs and low values. Although values have now surged, it takes more than three years for newborn heifers to reach the milking herd.
CoBank estimates that the shortage could deepen, with inventories declining by nearly 800,000 head before 2027. Heifer prices are already hitting record highs and may rise above $3,000 per animal.
Artificial insemination trends show how dairy farmers adapted. From 2017 to 2020, beef semen sales nearly tripled, with most purchases coming from dairy farmers. By 2024, over 7.9 million units of beef semen were sold to dairies, reflecting a strong shift toward beef production.