From beef-on-dairy calves fetching record prices to $11 billion in new processing plants, U.S. dairy is riding a wave of momentum fueled by consumer demand for protein and historic levels of investment.
The U.S. dairy industry is in the midst of a record-breaking boom — fueled by premium beef-on-dairy calves, historic investments in processing plants and surging demand for protein both at home and abroad.
Beef-on-Dairy: A Revenue Stream That’s Reshaping the Market
Dairy farmers across the U.S. aren’t just milking cows — they’re tapping into a lucrative side market. Record cattle prices are giving rise to “beef-on-dairy,” a crossbreeding trend that’s bringing in premium prices and reshaping the value chain.
“I think it is an enormous revenue stream for dairy farmers,” said Gregg Doud, president and CEO of the National Milk Producers Federation (NMPF). “The number I hear is about $1,400 for that black day-old calf. As the old beef guy, I think that’s going to be there for at least another year or so — maybe more.”
The result, Doud says, is the dairy industry is “hitting on all cylinders,” as dairy producers capitalize on strong beef genetics and elevated cattle values to diversify income.
New Wave of Investment
At the same time, the U.S. is seeing a level of investment in dairy processing never before witnessed in American agriculture.
“It really is $10 billion — 2023, 2024, 2025, 2026 — in new dairy processing investment in the U.S.,” Doud said. “There’s nothing like it in the history of U.S. agriculture, of any commodity, anywhere in the world.”
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According to Michael Dykes, president and CEO of the International Dairy Foods Association (IDFA), more than $11 billion is flowing into 53 new or expanded dairy manufacturing facilities across 19 states, from New York to Texas to Idaho. These projects are slated to come online between 2025 and 2028.
“Investment follows demand,” Dykes says. “It’s phenomenal — the scale and scope of what’s happening right now.”
Production Rising to Meet Global Appetite
Farmers are responding to those signals. USDA data shows U.S. milk production is up nearly 5% year over year, and the agency projects another 27 billion pounds of milk by 2034.
Exports have also surged, reaching a record $8.2 billion last year.
“I can’t tell you how many meetings I went to where people said, ‘We’re scared to death there won’t be enough milk,’” Dykes recalls. “I said, don’t fret for one moment — dairy farmers hear the market calling for milk. Milk will come.”
America’s Dairy Demand Hits Record Highs
Domestic demand is booming too. Americans are consuming an average 661 pounds of dairy per person per year — the highest ever recorded.
“Cheese is driving the bus,” Dykes said. “We’re eating about 42 pounds of cheese per person per year — and pizza has clearly contributed to that.”
But it’s not just cheese. Butter, yogurt, premium ice cream and even milk itself are seeing renewed strength.
“Milk has been trending downward for the last few years,” Dykes said. “But even last year, milk took a turn up — led by whole milk, high-protein milk and lactose-free options.”
The Protein Craze Powering Dairy’s Momentum
Behind this surge is one key word: protein.
“The demand for protein globally is unbelievable,” Doud says. “Everywhere I go, I tell people — we’re having a moment here on the dairy-side of the equation.”
Doud notes dairy’s protein-rich products — from cheese to whey — are meeting consumer demand both domestically and internationally.
“We’re up 2% this year in volume, 16% in value,” he says. “Global demand for dairy is rolling, and we are right in the hunt.”
Dykes agrees, pointing out the “protein craze” isn’t just helping beef and pork — it’s boosting dairy too.
“Most of the products that have ‘protein added’ are dairy-derived proteins, like whey from cheese plants,” he says. “Consumers globally cannot get enough protein. Dairy has a protein that’s highly digestible and fits perfectly with the health and wellness mood of this country. We’re even adding protein to ice cream.”
A Growing Industry with a Rural Footprint
The dairy industry’s impact stretches far beyond store shelves. Dykes says the U.S. now has 1,200 processing plants, employing 3 million people, generating $200 billion in wages and paying $83 billion in state and local taxes.
“These plants are going into rural communities — where the milk is produced,” Dykes adds. “That’s where the jobs and opportunities are being created.”
Texas, South Dakota and Kansas are seeing the largest waves of new investment, with New York emerging as a new processing hub.
Labor: The Industry’s Biggest Challenge
Even with growth on nearly every front, one major hurdle remains: labor.
“The administration is working on short-term solutions through the Department of Labor — mainly H-2A or seasonal programs,” Doud explains. “But that really doesn’t do anything for us on the dairy side because we need year-round help.”
He says lasting change will require Congressional action.
“We have to have Congress change the law,” Doud says. “House Ag Committee Chairman G.T. Thompson is working on this, but it’s a big lift. We always get stuck on the 60-vote issue in the Senate. We’ve got to make another run at this.”
Doud remains hopeful a political breakthrough could come — much like the immigration reforms of the late 1980s — to finally deliver a sustainable labor solution for dairy.
America’s Dairy Future
From booming exports to billion-dollar investments, the dairy sector is on a trajectory few could have predicted a decade ago. Industry leaders say if trade and labor challenges can be addressed, the U.S. will continue to cement its place as a global dairy powerhouse for years to come.
“We’re hitting on all cylinders right now,” Doud says. “And if we can keep that momentum going, there’s no limit to how far U.S. dairy can go.”
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