The Current Dairy Crisis

Megadairy / Factory Farm is A dairy operation housing over 1000 cows in confinement. The technical term is Concentrated Animal Feeding Operation, or CAFO.

Since 2015, the price that farmers get for their milk has been well below what it costs them to produce; it costs them money to produce our nation’s milk supply. In the last year, farmers have been paid about $16 for 100 pounds of milk, while that amount costs them about $23 to produce. Four years of these prices mean farmers can’t pay for feed, seed, vet visits, equipment repairs — or even for heat, electricity or food for themselves and their families. Megadairies can absorb these losses, but family farmers cannot.

This price drop has caused dairy farms to close in record numbers. In the last year, for example, Wisconsin (the second largest dairy state), lost nearly 700 dairy farms, an almost 30 percent decline from the previous year. Trends are similar in other dairy states.

The situation today’s dairy farmers are facing is catastrophic, and comes on the heels of decades of dairy consolidation. In 1997, 125,000 US dairy farms were milking 9 million cows. In 2017, the number of farms had dropped dramatically to 54,000, while the number of cows had grown to 9.4 million. In about the same period, annual US milk production grew from 167 billion pounds to 218 billion pounds, meaning that much more milk is being produced by more cows but on many fewer farms. In fact, over half of all milk sales in 2017 were from operations with over 1,000 animals, with fully one-third of sales from dairies with over 2,500 cows.

Infographic about dairy farm consolidation

How Milk Pricing Works

Dairy farmers sell their fluid milk to a processor, which bottles it or turns it into cheese, yogurt or another product. In economic terms, dairy farmers are called price “takers” rather than price “makers,” because the extreme perishability and constant milk production makes the farmer dependent on the processor. If the processor declines a farmer’s milk, the farmer has nowhere to put it because he only has limited storage and the cows will just keep producing milk the next day. This gives processors a great deal of power to pay whatever price they want; the farmer has to accept it or risk not having their milk picked up.


In an effort to gain more power over their own prices, dairy farmers established cooperatives, as far back as the 1800s. Pooling milk from many farms gave cooperatives the bargaining power to negotiate better prices for their farmer members and has continued to be a successful strategy for farmers for many years. However, dairy coops have evolved and grown; the largest today controls one-third of the US milk supply and is involved in all parts of the supply chain, including processing and distribution. Many farmer members of the largest dairy coops say the coops act more like corporations than organizations working on farmers’ behalf, pointing to expensive corporate offices, lack of transparency in dispersal of milk payments and, in the worst cases, outright corruption and collusion.


The US Department of Agriculture (USDA) has also attempted to address farmer price issues and today sets regional base prices for milk. Unfortunately, that price today is not based on how much it costs a farmer to produce milk, including feed, fuel, equipment and other farm expenses. Instead it is based on market prices of milk products: butter, cheese, dry whey and powdered milk. Manufacturers of dairy products (which are usually the processors themselves) tell USDA how much they were paid for their butter and cheese every week; these numbers are then plugged into a complex formula that determines the price that processors must pay dairy farmers for their milk. Since it is not a system designed to cover farmers’ production costs, the base price is often far less than what farmers need to break even.

Further exacerbating the problem is a shrinking number of places that farmers can sell to. Historically, most regions had many dairy processors, so farmers — or their coops — could negotiate for a better price. Now, however, some regions only have one or two. In recent years, even the remaining processors have been consolidating, or they prefer to pick up milk from just a few large dairies instead of many smaller farmers. Some large grocery chains have now begun to produce their own milk, leading dairy processors that have supplied those stores to end contracts with their farmers. If the only processor in the region terminates farmers’ contracts, they are left without a place to sell their milk and few options besides selling off their cows.


With milk prices not adequately compensating dairy farmers for their work and costs, a fast-shrinking number of buyers, and cooperatives (which often seem to work against the interests of their farmer members), many smaller farmers have just two options: get big or get out. Large dairies can take advantage of economies of scale, as well as subsidies and tax incentives for expansion. Farmers, who cannot expand or who do not want to wait for milk prices to go back up, wait anyway until they can’t wait anymore and have to get out of the business. In the last year,  surplus prices have dropped so low that even midsize dairies, which had expanded in recent decades (simply to remain viable), are also getting out.

Problems with Megadairies

As long as there’s still enough milk to make all the Greek yogurt and ice cream we can eat, why does it matter if family farms close and all our dairy products come from huge industrial operations? After all, larger operations are more economically efficient in terms of equipment, land and other resources.

The answer is that big operations only look efficient if you don’t look at the externalized costs: all the costs created by the megadairies that are paid by someone else. If a manure storage lagoon leaks and pollutes the water table, as just one example, the operator generally doesn’t pay all the costs of cleanup. Instead, the town pays for a new water filtration system or individual families have to purchase bottled water. The megadairy can do business as usual, with other entities cleaning up its messes and picking up the tab. Megadairies treat cows inhumanely, pollute the air and water, and extract wealth from the local community instead of supporting the economy. In short, megadairies cause mega problems.

Animal Welfare Concerns with Megadairies

Cows that are housed in megadairies have one purpose: to produce as much milk as possible. The near-constant production takes a toll on their bodies, and the conditions they live in can be stressful, leading to shortened lifespan.


Dairy cows are pushed to produce so much milk that they are spent in just a few years. Dairy cattle can live to age 15 or 20, and in a humanely-managed herd, cows can effectively produce milk for 12 to 15 years. But in a megadairy, cows stay in the herd only until about age five, when their productivity begins to decline and they are sold to slaughter as beef. Dairy cows culled for low productivity or other reasons make up about 8 percent of US-produced beef.

Male dairy calves also have shortened lifespans. Not being able to produce milk, they are essentially extraneous to dairy production and are sold as meat — this is true not just at megadairies, but on most family-scale pasture-based farms, as well. Male dairy calves are sold either to be raised as full-grown beef cattle or as veal, to be slaughtered at 18 to 24 weeks of age.


To adapt cows better to the close and stressful quarters of a megadairy, some operators perform painful mutilations on the animals, including removing part of their tails or their horns. Fortunately, these cruel practices are on the decline. Some animal welfare labels for dairy indicate that the animals did not undergo these procedures (see labels section below as well as our comprehensive Food Label Guide for Dairy).

Tail Docking of Dairy Cows

Tail docking, the partial amputation of up to two-thirds of the tail, usually performed without anesthetic, has been controversial in the beef and dairy industries for years. The vast majority of research on the practice does not find benefits for improved hygiene or animal health; most dairies that dock cows’ tails cite worker comfort as the reason. However, many studies have shown that the practice causes pain, and increases animals’ long-term distress from flies. The practice is banned in several European countries and a few US states and is opposed by numerous scientists, veterinary groups and others. A 2005 survey found that tail docking was practiced by 82 percent of dairies, but this percentage has plummeted in recent years. By 2013, about half of all operations had cows with docked tails and only about a third of operations were still engaging in this practice.

The dairy industry introduced a voluntary program calling for the discontinuation of all tail docking by the beginning of 2017. Dairies still engaging in this may be suspended from the program, which could make it harder for them to find a market for their milk.

Dehorning of Dairy Cows

Removing the horns of dairy cattle reduces risk of injury to people and other cattle. Cattle less than eight weeks old can have their horn buds removed before they attach to the skull, called disbudding, while dehorning refers to the removal of horns after they have attached to the skull, but the terms are often used interchangeably. The practice causes pain and discomfort for the animal; as such, the American Veterinary Medical Association recommends procedures to reduce or eliminate these effects, including use of analgesics or anesthetics. Ninety-five percent of dairy operations practice disbudding/dehorning, but only 28 percent use pain medication. About a quarter of operations have avoided the issue altogether by breeding their animals with bulls that produce offspring without horns.


Cow housing can vary a great deal between operations. The buzzword for housing in the dairy industry is “cow comfort,” as milk production slows when cows are hot, dry, hungry or otherwise uncomfortable. Even so, conditions can be dirty, overcrowded and hard on the animals’ bodies.

Free-stall barns, noted above, house cows in both medium and large operations in colder climates. Large operations in warm climates, such as the megadairies in California, Texas and New Mexico, often house cows on a dry lot, a large outdoor area with structures for shade. Both of these styles have separate areas for the animals to lie down, feed and be milked. Manure in free-stall barns is scraped or flushed out of the barn with water and stored in pits or lagoons (see details below); on dry lots, some of the manure turns into dust to be inhaled by the cows and the local community.

Some of these operations give the animals sufficient space to move around and comfortable surfaces on which to walk and lie down, but many others do not. Flooring in indoor operations is generally concrete, which is hard, abrasive, and slippery, and can cause hoof damage. Another stressor in indoor dairies is stocking density: how many cows are in the facility. Too many cows can mean that those who are subordinate in the social order don’t get a place at the feed trough or enough time in a resting stall.

Cows can spend 12 to 14 hours a day lying down, which is necessary for milk production and maintaining their general health. Cows actually place a higher priority on resting than they do on eating or socializing, indicating that it provides important biological functions. Resting places vary greatly among operations, from concrete covered with sand or sawdust to rubber mats. Like people, cows prefer lying down in soft and dry areas. Cows provided resting places that are too hard, wet or soiled spend less time lying down, which can make them stressed, decrease milk production and compromise their immune systems.


The digestive tracts of cattle have evolved to digest grass. The feed ration of most dairy cows that are housed indoors includes hay or silage (fermented plant matter, which they digest like grass), along with soybeans and corn, which they do not digest as well. A high percentage of grain in the diet can lead to acidosis, a condition of the digestive tract that can affect digestion and cause health problems from liver abscesses to lameness. Dairy cattle are also commonly fed byproducts from other industries, including brewers’ grains, cottonseed hulls, citrus pulp and blood meal, a dried blood slaughterhouse byproduct used as a source of protein. Some of these byproducts have negative consequences: for example, distillers’ grains, a by-product of ethanol production, increase ammonia levels in cattle waste — contributing to more odors and creating potential health problems for the cows and dairy workers.

Cattle kept in confinement, especially in overcrowded conditions, are more likely to be stressed than those grazing on pasture, and stress can make them prone to health problems. To prevent or treat infection, parasites and illness, dairy cattle are treated with a variety of drugs. Unlike hogs or beef cattle, dairy cows that are part of the milking herd are not given routine antibiotics, but these drugs are regularly given to heifers, which have not yet begun milking. Milk is routinely tested for residue of several common antibiotics and other drugs; when cows are given any of these drugs for a specific condition, their milk must be discarded until the drugs have passed out of their system. However, a 2015 investigation by the Food and Drug Administration found that a small percentage of milk tested positive for antibiotics that are not supposed to be used on dairy cows at all, which suggests that farmers are not necessarily following the rules.


In the late 1980s, scientists discovered they could produce recombinant bovine somatotropin (rBST, also known as recombinant bovine growth hormone, rBGH), a naturally occurring growth hormone, through genetic engineering. Injected into a dairy cow, the hormone increases milk production by 15 percent. The US Food and Drug Administration (FDA) approved its use in milk production in 1993. Milk produced from cows injected with rBST was the first genetically engineered food product to be approved by the US government, though it is banned in Canada and the European Union.

The use of the hormone was controversial from the beginning. Because the FDA had determined it was safe, no label was required on milk from cows treated with it, and consumers objected to the lack of transparency. A 1999 Canadian study found no definitive human health impacts from the hormone, but found a number of impacts on cows, including a 40 percent increase in infertility, a 55 percent increase in lameness, and a 25 percent higher rate of mastitis, a painful udder inflammation, which requires treatment with antibiotics.

Despite this opposition, many economists predicted very high adoption rates of the hormone, but instead many farmers have found that it was not profitable, especially as consumer pressure made supermarkets and dairy processors no longer want to use treated milk. USDA reports that its use dropped from over 17 percent in 2007 to about 14 percent in 2014. Organic milk comes from cows not treated with rBGH.

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