Breaking free from the chains of the past Where
truth moves faster than a Holstein calf No law
waiting on some printed page We're charting new
ground in the digital age From genomic codes
to robot facts We cut through the noise, no hold
them back not your daddy's dairy news tonight
we're sparking Welcome back to the Bullvine Podcast,
where we cut through dairy industry noise to
get you the insights that actually matter for
your operation. And today we're diving deep into
a feature piece that's been generating some serious
buzz. This one's got layers and some surprises
that are going to make farmers rethink fundamentally
how they've been approaching their relationship
with their processor. Okay, let's unpack this
because the core context of the American dairy
market has shifted from challenging to something
more like existential. Right. On paper, we are
this colossal, you know, $111 to $120 billion
agricultural success story. But those headline
figures, they mask a violent internal restructuring.
That's the perfect word for it. It's violent.
We are not just talking about consolidation.
We are talking about the vanishing of the family
farm model. We've lost 15 ,000 farms in the last
five years alone. And that loss is not evenly
distributed, which is really why we're having
this deep dive. The reality is stark. 834 mega
farms now control a stunning 66 % of all U .S.
milk revenue. Two -thirds of the market. In the
hands of 834 farms. That concentration of supply
creates an inevitable concentration of power
in the processing sector. It has to. So if you
are one of the other 23 ,000 farms still trying
to make a living in this industry, your market
access, your pricing leverage, and frankly, your
long -term survival are fundamentally at risk.
We are going to expose the arithmetic of that
dominance. The microeconomics behind it too,
the stuff that makes the small farm, you know,
just non -competitive. And we have to talk about
the new rules of engagement. Absolutely. And
we're not going to. shy away from what is probably
the most difficult conversation for American
producers, the DFA paradox. Oh, definitely not.
We are going to show you, with data and settled
antitrust cases, how your supposedly farmer -owned
cooperative, with its 44 processing plants and
$23 billion in revenue, manages to capture unprecedented
profit margins for its corporate arm. Whilst
producer members were absorbing 30 % to 40 %
milk price crashes. Exactly. That structural
conflict of interest, backed up by Department
of Justice scrutiny and multimillion -dollar
settlements, is the cornerstone of this deep
dive. So our mission today is to give you the
playbook. The playbook to survive in a market
where 834 farms set the price floor and three
global giants control the pricing ceiling. Let's
start with the cold, hard data, the arithmetic
of dominance. The latest analysis, extrapolated
from the 2022 Census of Agriculture, confirms
that the U .S. had 24 ,082 dairy farms. Okay.
Which is down from 39 ,303 just five years earlier.
Wait, wait, let's pause on that percentage. That
is a 39 % decline in five years. 39%. The sources
indicate this is the largest percentage drop
recorded between census periods since 1982. So
we're not just shrinking, the pace of attrition
is accelerating. It is. And for the majority
of us who operate under 500 cows, that pace is,
it's terrifying. It leads us directly to the
834, that number you need to remember. This is
the cohort of farms with 2 ,500 or more cows.
A big guise. They are the only growth sector
in farm numbers. They expanded their control
from 57 % of sales value in 2017 to 66 % today.
This isn't just organic growth. This is... market
capture. Hold on. That means a vast majority
of us, the approximately 80 % of operations with
under 500 cows, are competing for less than 25
% of the overall milk market. That's the math.
And when I look at the upper Midwest where I
operate, the 50 to 99 cow herd used to be the
absolute backbone, you know, the stability point.
What happens to that segment now? It's being
hollowed out. The data confirms the 50 to 99
cow herds are facing the sharpest declines because
they are caught in an economic vice. Oh, so?
They're too large to operate as a niche, low
-debt, lifestyle -adjacent farm, which often
describes that very smallest tier, you know,
under 50 cows. Right. Those tiny farms sometimes
survive because they are not solely reliant on
the milk check or they serve hyperlocal markets.
They've got another income source. Precisely.
Exactly. My neighbor with 40 cows can sell raw
milk directly or has a specialty organic contract.
They don't have $10 million in facility debt.
But the 150 cow operation. That's the one. Which
requires significant capital investment in machinery,
labor, and facilities. That farm is operating
solely on thin commodity margins. And they cannot
compete with the operational metrics of the 834.
They are the true victims of this structural
math. And the implications extend beyond just
the farm numbers. It means the processing infrastructure,
the plants, the tankers, the haul routes. is
rapidly adapting to this new concentrated supply
chain. Of course. Processors are not optimizing
their routes for 24 ,000 scattered pickups. They're
optimizing for 834 mega dairies that can fill
multiple tankers daily from a single location.
That changes the fundamental bargaining power
equation overnight. It creates a feedback loop,
doesn't it? 100%. The processor favors the megafarm
because of lower hauling and overhead costs,
which accelerates farm closures and fragmented
milksheds, which then further incentivizes the
processor to invest capital only where the big
farms are located. That feedback loop brings
us to our most brutal point, the microeconomics.
We have to challenge the popular but destructive
idea that if a smaller farmer fails, it's solely
due to bad management or inefficiency. Oh, I'm
so glad you said that. The data shows a structural...
insurmountable competitive moat based purely
on size. And we can quantify that moat down to
the penny. I cannot stress this enough. I talk
to farmers who beat themselves up daily thinking
they just need to work harder or run their numbers
tighter. But the reality is that the efficiency
gap is so wide that working harder is often futile
against automated industrialized scale. Let's
put numbers on that futility. We looked at the
specific cost of production, or COP data. Midsize
farms, those in the 100 to 199 cow bracket, have
an estimated COP of approximately $32 .83 per
hundredweight. Okay, $32 .83. Now look at the
megadairies, the 2 ,500 plus cow operations.
They operate at an estimated $23 .66 per hundredweight.
Okay, so that's $9 .77. That's nearly $10 per
hundredweight disadvantage before the mid -sized
farmer even starts. $9 .77. That is the cost
of entry to compete in the commodity market.
You cannot outmilk a $9 .77 disadvantage. You
simply can't. And the sources detail exactly
where this catastrophic gap originates. It isn't
just a generic overhead figure. We can break
down the components. Let's do it. Start with
feed acquisition, which is the largest input
cost. Large farms leverage their purchasing power,
securing rail car and massive volume pricing.
That immediately gives them a $1 .50 to $2 per
hundredweight savings compared to a smaller farm
buying feed by the truckload or spot market.
And that assumes perfect conditions. If a smaller
farm gets hit by volatile commodity prices or
needs to haul feed an extra 50 miles because
the local supplier only sells in high volume
to the big dairy down the road, that gap widens
further. The supply chain itself is rigged for
volume. It prioritizes the volume. Absolutely.
Beyond inputs, the next colossal advantage is
labor efficiency. Mega dairies achieve a 40 %
to 60 % labor cost reduction per hundredweight.
Through heavy automation, specialized labor pools,
and continuous flow operations, we're talking
about rotary parlors running 2047 advanced robotics
handling materials and sophisticated feeding
systems. Meanwhile, when I look at the midsize
farm, they are reliant on manual or traditional
methods, and they are struggling with labor shortages
and rising wages. It's a double whammy. It is.
A 500 -cow operation has to pay competitive wages
and deal with the high fixed cost of regulatory
compliance, say, $50 ,000 a year for environmental
reporting and safety training. For them, that
cost hits them hard. But for the 5 ,000 -cow
operation? Right. For the 5 ,000 -cow operation,
that same $50 ,000 is diluted. across millions
of pounds of milk, making the per hundred weight
cost negligible. It's the dilution of fixed costs
that creates the moat. And as labor costs rise,
the $11 billion investment we'll discuss later
reinforces this. It's an investment in robotics
to immunize production against the high cost
of human labor. You know, I challenge the conventional
wisdom here. Those fixed costs, machinery, facilities,
regulatory burden, they were manageable 10 years
ago. What changed is the technology scale. Say
more about that. You need millions of dollars
in robotic infrastructure now just to achieve
parity with the labor costs of 10 years ago.
The mid -sized farmer who can't afford that immediate
multi -million dollar capital expenditure is
structurally doomed in the commodity market.
That financial squeeze leads to a grim yet economically
rational exit strategy. The beef market paradox.
Yeah, this part is... It's tough. As the $9 .77
margin squeeze tightens, the high cull cow prices
we've seen, exceeding $145 per hundredweight,
have become an escape valve. It's tragic that
the most profitable moment for many producers
right now is the day they decide to quit. That's
a powerful way to put it. The liquidation value
of the herd has hit historic highs, meaning they
can strategically depopulate their herd, sell
into the lucrative beef market, pay down some
debt, and exit the business with dignity rather
than endure years of negative equity. The sources
confirm this accelerates consolidation. The cows
leave the mid -sized farms permanently, closing
them down. Critically, that lost milk quota,
the processing capacity, is immediately absorbed
by the expanding 834 megadairies. And they need
it. They do. These large dairies need that high
volume throughput to service their massive debt
loads and run their automation systems efficiently.
So the processor benefits from the mega farm
scaling up and the mega farm benefits from the
smaller farm liquidating, which provides capital
and reduces market competition. It's a vicious
cycle where consolidation is incentivized at
every single point in the supply chain. Now we
follow the money. If 66 % of the revenue is concentrated
in 834 farms, who is buying that concentrated
supply? Right. Where is it all going? The processing
sector has coalesced into a tight three -headed
oligopoly, and they are global giants. This is
where we shift from domestic competition to global
market dynamics. It's a whole different ballgame.
Exactly. Our three giants by 2024 revenue are...
Lactalis, the French behemoth, at $31 .9 billion.
31 .9. Wow. Jerry Farmers of America, DFA, the
U .S. co -op, at $23 .8 billion. And Saputo,
the Canadian powerhouse, at $13 .9 billion. Okay.
Let's start with Lactalis, the aggressive foreign
hegemon. They are privately held, which is a
massive advantage. They don't have to deliver
predictable quarterly results to Wall Street.
They can take expensive, long -term strategic
positions and use their massive cash reserves
to execute rapid acquisitions. It means they
play a different game than the publicly traded
Saputo or even the cooperative DFA. They are
aiming for market dominance, not just predictable
returns. And their acquisition strategy is relentless.
Reviewing their recent spree shows just how aggressively
they are moving into the U .S. consumer market.
They grabbed General Mills' U .S. yogurt business
for $2 .1 billion. That's the Yoplat deal. That's
Yoplat and Go -Gurt, instantly adding $1 .5 billion
in net sales to their U .S. ledger. They also
acquired Fonterra's global consumer business
for another $2 .3 billion, cementing their control
over global distribution and brand portfolios.
This strategy is fascinating because they are
buying brand equity and distribution infrastructure,
not just milk plants. That's a key distinction.
This gives them massive control over global dairy
trade flows. U .S. farmers effectively become
reliable, high -volume commodity suppliers for
a foreign corporate landlord. When the profits
are generated by those high -margin brands, they're
often repatriated back overseas, rather than
reinvested locally or shared with producers.
Okay, now let's pivot to the DFA cooperative
paradox. This is the heart of the conflict for
American dairy farmers. This is the one everybody
wants to talk about. DFA markets milk. for over
11 ,000 members, handling roughly 30 % of U .S.
milk production. The central issue is that DFA
also owns and operates 44 processing plants,
a number significantly expanded by the 2020 Dean
Foods acquisition. The structural conflict of
interest is blindingly clear and needs detailed
analysis. You, the producer, are a member and
owner of the cooperative, but that cooperative
has two masters. Two masters. The producer marketing
arm, which is supposed to maximize your milk
price, and the corporate processing arm, which
maximizes profits by minimizing its input costs,
which is your milk price. And when milk prices
crashed 30 % to 40 % in 2023, the data shows
that processors with integrated operations DFA
included captured massive margin expansion. They
did very, very well. They kept their input costs,
the raw milk check paid to you, the farmer, low,
while profiting handsomely on the high margin,
value -added products like cheese, ingredients,
and fluid milk. The producer absorbed the losses.
The processing arm captured the margin. When
the market is volatile, the farmer's milk check
becomes the corporate division's raw material
discount. So the question stops being, are we
partners? And becomes, am I their supplier to
be managed? Exactly. The scale of this market
power prompted the Department of Justice intervention.
The 2020 Dean Foods acquisition, where DFA bought
44 fluid and frozen processing assets for $433
million, was massive. It was huge. The DOJ stepped
in and required DFA to divest plants in key milksheds,
specifically Harvard, Illinois, De Pere, Wisconsin,
and Franklin, Massachusetts. And the DOJ was
essentially saying, if you acquire all these
assets, you will have too much market control,
especially in fluid milk, and you will be able
to dictate prices to non -member producers and
manipulate the FMMO pool. So that intervention
provides concrete regulatory validation of the
high level of concentration we are discussing.
It's not just a theory. The government stepped
in and said, this is too much. Let's look at
Saputo, the third player, the Canadian efficiency
architect. Their $13 .9 billion revenue is underpinned
by their network optimization program. A strategy
that embodies capital labor substitution. Right.
And when Saputo talks about optimization, they
mean permanently closing legacy high labor facilities.
And transferring that production to fewer, larger,
highly automated greenfield sites. It's a brutal
but effective business strategy. We've seen the
impact across the U .S. They announced or completed
major facility closures in places like Lancaster
and Green Bay, Wisconsin and Southgate, California.
These closures represent millions in write downs.
But the long -term structural savings from automation
far outweigh the short -term pain for them. For
them, yes. And this production wasn't just stopped,
it was transferred. The classic example is their
new state -of -the -art cut -and -wrap facility
in Franklin, Wisconsin. That site relies heavily
on robotics and continuous flow packaging, allowing
Saputo to maximize throughput while minimizing
dependence on volatile, high -cost human labor.
It's an investment in business insulation. But
the strategy of optimization isn't just about
labor. It's about technological differentiation.
Let's discuss the quiet giant. Leprino Foods.
Ah, Leprino, the definition of a technological
moat. Most consumers have never heard of them,
yet they control 85 % of the U .S. pizza cheese
market, supplying virtually every major chain.
They are a $3 .6 billion entity built almost
entirely on specialized cheese. And their dominance
isn't merely through massive scale, it's through
intellectual property. That's the key. IP. Liprino
holds patented manufacturing processes that control
the complex characteristics of mozzarella, how
it browns under heat, how it melts, and critically,
how it stretches. This IP prevents their high
-specification product from being commoditized
by a competitor. This is a profound insight for
producers. This is why the $11 billion investment
we're coming to is heavily skewed toward cheese
and ingredients. Because that's where the margin
is. In commodity fluid milk, you race to the
bottom. In specialized ingredients, if you own
the IP, the technology that makes the perfect
pizza cheese or the perfect protein isolate,
you dictate the margins. That technological barrier
is what keeps the smaller, less sophisticated
processor out. It's a brilliant business model.
Now, on the flip side, we have to note that foreign
investment, while leading to consolidation, also
modernizes outdated U .S. infrastructure. That's
true. It's not all negative. Lactalis, despite
its aggressive acquisitions, committed $75 million
to upgrade facilities in New York. A huge part
of that is a $60 million expansion in Buffalo,
specifically to boost mozzarella and provolone
production by 37 million pounds annually. That's
a lifeline for the specific New York milkshed,
but again, it reinforces the trend. How so? Lactalis
isn't making that investment contingent on a
fragmented supply. They are betting that the
New York milk volume will continue to consolidate
into fewer, larger, and far more consistent suppliers
who can meet that massive, specialized throughput
demand. This correlates perfectly with the geographical
consolidation we are seeing. Overall cheese output
is hitting records, yet production plummeted
11 % in Pennsylvania and dropped 2 % in Iowa.
While California and Wisconsin maintain market
share, processors are ruthlessly rational. They
are following the largest, most efficient milk
supplies. So if your regional processor shuts
down, your market disappears immediately. Gone.
Overnight. And when the milk is rerouted to an
expanding megafacility hundreds of miles away,
the hauling cost makes your already tight margins
evaporate. It's a structural mechanism for eliminating
the smaller, more geographically isolated operation.
This brings us to the future implications, specifically
the $11 billion deadline. Right. According to
the International Dairy Foods Association, or
IDFA, over $11 billion is flowing into 53 new
or expanded processing facilities across 19 states
scheduled to come fully online by 2028. This
is the most significant agricultural infrastructure
investment surge in modern history. And we must
be crystal clear, this capacity is not being
built for 24 ,000 small dairies. No, it is exclusively
designed for high volume throughput, export markets,
and specialized high margin ingredients. Think
about those specialized ingredients. whey protein
isolates, lactose powders, pharmaceutical -grade
dairy derivatives. These products demand a highly
consistent, massive volume, year -round supply.
And a 200 -cow farm simply cannot guarantee the
volume required for a processor building a multi
-million -dollar facility aimed at, say, the
Asian protein power market. Not a chance. They
need a steady stream of 500 ,000 pounds a day,
365 days a year. The big three are pre -securing
contracts with the 834 mega dairies because they
know those operations can provide the scale and
consistency the new automated infrastructure
demands. That 2028 deadline is your timeline
for adaptation. If you haven't secured a niche
market or scaled up by the time that $11 billion
in infrastructure comes fully online, you risk
finding yourself in a milkshed with no processor
willing to take your supply. Because their contracts
will already be filled by the large high volume
operations. And fueling this push for automation
is the labor paradox. We know 51 % of the U .S.
milk supply relies on immigrant labor. Yet the
industry struggles immensely to staff both farm
operations and new construction projects. It's
a huge friction point. We saw budget overruns,
like the Dairy Gold facility in Pasco, Washington,
where construction costs ballooned by $300 million,
largely due to labor shortages and material inflation.
So if the processors can't build efficiently
and the farms can't staff their parlors, the
corporate solution is capital substitution. Exactly.
The $11 billion is primarily an investment in
robotics. automated palletizers, and continuous
flow vats. This raises the capital barrier to
entry incredibly high, further entrenching the
dominance of the big three who can afford this
upfront cost. To immunize themselves against
rising labor costs and the ongoing political
uncertainty surrounding immigration. And finally,
the regulatory context. The FMMO controversy.
Yeah, yes, the make allowances. The USDA approved
a massive increase to the make allowances in
2025, which is the fixed credit processors received
to cover manufacturing costs. Everything from
energy and labor to packaging. Let's break down
the mechanics because this is critical for every
farmer listening. The make allowance is subtracted
from the wholesale price of the finished product,
say cheese, to determine the minimum price the
processor must pay you for the raw milk. So when
that allowance increases, the minimum price you,
the farmer, receive goes down. It's an instant
structural transfer of hundreds of millions of
dollars from producer milk checks directly onto
the processor balance sheets. And while the USDA
justifies this by citing rising processing costs,
which are real, the implementation of this change
means the producer is absorbing the cost of inflation
on the manufacturing side. And here's the governance
failure. This increase was approved through block
voting by cooperative boards like DFAs. Right.
So when the cooperative casts a single vote representing
all its thousands of members, the individual
farmer who opposes the allowance increase is
effectively disenfranchised. The cooperative
corporate leadership, which benefits from the
increased allowance via the processing arm, holds
all the power in the voting process. The FMMO
block voting structure and the inherent conflict
within the co -op model sets the stage perfectly
for our deeper look into governance failure and
antitrust issues. We have to discuss the landmark
$34 .4 million antitrust settlement in the Southwest.
This is critical because it validates years of
pharma suspicion that the cooperative structure
can be used not to serve the producer, but to
manipulate the market against them. DFA's share
of that settlement was $24 .5 million. resolving
a class -action antitrust lawsuit in the Southwest.
And the core allegation was a conspiracy to suppress
milk prices from 2015 through 2025. How did they
allegedly do it? The mechanism centered on the
Greater Southwest Agency, or GSA, which was jointly
owned by DFA and select milk producers. The GSA
wasn't just a data -sharing body. It was allegedly
used to coordinate pay structures and pricing
data, effectively eliminating price competition
for raw milk in that region. Think of it like
this. If two major processors are bidding on
raw milk, the price goes up. Right. Basic supply
and demand. But if those two major processors
coordinate their bidding through an agency they
jointly own, they can agree to a lower ceiling,
guaranteeing both get the raw material at a discount.
The GSA was allegedly the vehicle for this cartel
effect. But the most compelling and insidious
allegation was the selective de -pooling. This
requires a brief explanation of FMMO mechanics.
Normally, all milk is pooled and farmers receive
a blend price. But the lawsuit alleged that when
market prices for certain finished products like
cheese were high, the cooperatives would remove
milk volumes from the FMMO pool. Why de -pool?
Why would they do that? Because removing the
milk allowed the processing arm of the cooperative
to retain the revenue surplus that was above
the regulated blend price. So instead of that
surplus being distributed to all farmer members
via the regulated pool price, the co -ops corporate
division captured that high margin revenue directly.
It's the ultimate conflict. When prices were
low, they kept the milk in the pool to stabilize
the member price. When prices were high, they
pulled the milk out to maximize corporate revenue.
It's a heads -I -win, tails -you -lose situation
for the co -ops corporate side. The settlement,
which forced DFA and Select to dissolve the GSA,
and implement mandatory antitrust training, validates
the suspicion that the cooperative structure
can and has evolved into a monopsonistic processor
viewing its members as managed suppliers. And
this settlement, following similar multi -million
dollar cases in the Southeast and Northeast,
establishes a clear and troubling pattern. It
forces the individual producer to acknowledge
that their own cooperative may not always be
operating in their financial best interest. So
we accept this reality. The brutal $9 .77 math
is against the small farm. Processors are consolidating
globally, and the cooperative model has governance
conflicts. We cannot end here. What is the actionable
survival playbook? This is the most important
part. Because the conventional wisdom is clear.
Solo farms are dead farms unless they drastically
specialize or collaborate. We need actionable,
size -specific strategies, starting with the
small herd, those under 200 cows who are facing
the sharpest attrition. For the small herd, forget
the commodity tank entirely. Your survival path
is specialization. You have to get out of that
game. The data shows the organic sector, growing
7 .7 % in 2024, is still viable. But the real
leverage is hyper -niche. Regional groups in
Pennsylvania supplying specialty markets A2A2,
grass -fed, heritage breeds, are reporting premiums
of $2 to $4 per hundredweight. Wait, let's connect
that back. If the commodity price is $23 and
your cup is $32 .83, you need nearly $10 in premium
to break even. A $4 premium from a niche market
only closes the gap halfway, but it's a necessary
start. You must combine that premium with drastically
lower input costs, often achieved through grass
-fed or reduced feed purchases, and extremely
low debt to survive. Exactly. A2A2 milk, grass
-fed certification, and establishing a hyper
-local brand with direct sales are no longer
side projects. They are the entire business model.
You must capture the maximum consumer dollar
possible. Now, the middle ground, the 200 to
1 ,000 cow tier, this is the hardest group to
advise. It is. They're caught in the middle.
They're too large for easy specialization, but
too small for the $23 and 6 hate under 6 efficiency.
They have to focus ruthlessly on quality and
components. They must leverage technology for
consistency. Robotic milking systems are a massive
capital outlay, easily $1 .5 million to $3 million
for this size, but they stabilize labor, improve
milking consistency, and drive down somatic cell
counts. And that consistency is exactly what
the new, highly automated ingredient plants demand.
And critically, this middle ground must achieve
collaboration without consolidation. Stop selling
milk alone. You have to. They must research and
join producer quality alliances in the upper
Midwest that have successfully negotiated component
premiums averaging $2 to $3 per hundredweight
by consistently guaranteeing butterfat above
4 .0 % and high protein. The sources showed Jersey
operations consistently achieving butterfat levels
above 5 .0%, which is how you access those substantial
component premiums. So if you pool your high
component milk with 5 or 10 other medium -sized
farms, you suddenly have the volume to negotiate
directly with the cheese or ingredient buyer.
bypassing the commodity spot market. Finally,
the big players, the 1 ,000 plus cow operations.
They have the cop advantage, but their risk is
reliance on a single massive buyer who will try
to lock them into long -term unfavorable terms.
Their survival strategy is leverage maintenance.
Never forward contract more than 60 % to 70 %
of your production. You must maintain flexibility
to capture spot market peaks. And you should
either own your transportation or maintain strong
relationships with multiple hauling options so
the processor cannot squeeze you on hauling costs
or threaten market access. And always, always
demand escalation clauses tied to feed costs
in long -term contracts. Do not depend on a static
base price. If inputs jump 20%, you need an automatic
mechanism to trigger a commensurate increase
in pay price. Maintain relationships with two
or three major buyers because, as the DFA case
shows, market power will eventually be used against
a sole supplier. The central takeaway, regardless
of scale, is that the battleground has entirely
moved from the efficiency of the farm parlor
to the leverage you hold in the market. 100%.
All right, farmer just finished morning milking.
They're driving to the feed store. What are the
three things they need to know from this deep
dive, the three actionable steps they must take?
Number one, immediate action starting this week.
Know your buyer's game. You must stop accepting
the status quo from your field representative.
Ask the critical high -level questions provided
in the source analysis. Like what? Like what
percentage of your milk goes to the export market?
What percentage is used for specialized ingredients?
And most importantly, what is the plan if your
processor... consolidates or closes facilities
in the next 18 months. If you don't know where
your milk is going, you don't know your risk
profile. And if your processor is investing $11
billion in automated ingredient plants, but you're
a 200 -cow commodity supplier, you are not aligned
with their future. The medium -term strategy
over the next three to six months has to be about
finding your premium alliance. If you are operating
under 1 ,000 cows, you must stop competing alone.
This means actively researching producer alliances,
not just talking about it, but attending meetings
and looking at bylaws. Explore specialty markets
like organic or A2A2 to capture the $4 to $8
per hundredweight premiums needed to bridge that
catastrophic cop gap with the mega dairies. You
need those premiums to fund the necessary capital
investments. You do. And finally, the long -term
positioning, the next one to two years. Assess
scale versus specialization. You must acknowledge
the 2028 deadline. The $11 billion new infrastructure
is coming online, designed exclusively for high
volume and consistency. So if you cannot realistically
scale your operation to 1 ,000 plus cows to become
a tier one supplier for the new infrastructure,
you must secure a niche market or a high component
contract immediately. If you try to survive in
the commodity market at a mid -scale size, the
brutal $9 .77 math and the consolidating power
of the big three will eliminate you before that
2028 infrastructure is even fully commissioned.
The time for hedging is over. This has been another
deep dive from the Bullvine podcast. If this
kind of analysis helps your operation, head to
www .thebullvine .com for more articles that
tell you what's really happening in dairy. Knowledge
really is power when you're facing a $9 .77 disadvantage.
And seriously, subscribe wherever you get your
deep dives. We're releasing episodes twice weekly
now, and trust me, you don't want to miss what
we've got coming next week about the escalating
risks associated with foreign land ownership
in agriculture, a trend that goes hand in hand
with the processing consolidation we discussed
today, and why the ownership of prime farmland
is becoming the next battleground for market
control.