Water availability and processing capacity king in dairy expansion opportunities

A dairy economist says the Upper Midwest remains the most ideal location for milk production growth.

Nate Donnay with StoneX tells Brownfield water availability for cows and feed production is a major factor for where dairy expansions are even possible.

“It’s going to be tough, or tougher than usual, to expand the herd and expand production in the western part of the U.S.,” he says.

Donnay says regional divides are becoming more apparent and growth is now mostly tied to where processing capacity is increasing.

“We have new base programs that are in place, new restrictions or penalties on growth and it’s really keeping milk production growth weak in large parts of the country,” he says.  “But where we have new plants, like in Michigan or South Dakota, we end up seeing some large increases in milk production in those states or regions.”

In places with water restrictions like California, Donnay says growth is mostly stagnant and will likely be limited long-term.

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