Half of all dairy farms are now large farms with 900 cows, up from 80 cows in 1987, says USDA report

Dairy farms have been shifting to much larger operations over the past two decades, leading to a rise in factory farms, according to a report from the Economic Research Service of the U.S. Department of Agriculture. The report found that "in 1987, after decades of consolidation, half of all dairy cows were on farms with 80 or fewer cows. By 2012, that midpoint herd size was 900 cows."

The main reason for consolidation is costs, states the report. "The largest farms earn substantially higher net returns per hundredweight of milk produced, and they have strong incentives to expand. Average milk costs of production fall sharply as herd sizes increase, and the largest farms—those with 2,000 or more head—realize costs, per hundredweight of production, that are 16 percent below farms with 1,000-1,999 head and 24 percent below farms with 500-999 head." Exports are also on the rise, accounting for $7.2 billion in 2014, up from $1 billion in 2003.

"Changes in the size structure of dairy farms reduced national-average milk production costs by nearly 19 percent between 1998 and 2012," states the report. "In turn, lower milk production costs reduced milk prices compared with what they would have been without structural change." (Read more)