Market Update: Farm Milk Production Trends Are Far from Average

Current overall trends in U.S. farm milk production show that the past two years have been far from average. All tracked categories -- from overall milk production to milk production per cow to the average number of cows on a farm — have increased during the past 12 months, with some categories showing continued growth for even longer periods.

December 2006 marked the 30th consecutive month with year-over-year increases in U.S. daily average farm milk production, according to the U.S. Department of Agriculture (USDA). This period of continuous increases is the second longest since 1970 and marks the longest stretch since the period from May 1979 through December 1983 when the U.S. dairy industry experienced 56 straight months of year-over-year increases in farm milk production.

After increasing by 3.9% in 2005, milk production posted a 2.7% growth rate for all of last year, according to USDA. Growing by more than 5% in the first quarter of 2006, milk production slowed to a rate of only 1.2% in July and August before rebounding to a rate of 2.4% last December.

Most of the growth in 2006 can be attributed to milk production per cow, which increased by 1.9% to 19,949 pounds of milk per cow. This continues a decades-long trend building on technological advances in each year. Since 1970, there have been only three years in which average daily milk production per cow did not increase: 1973, 1984 and 1996. Last year was the ninth consecutive year showing an increase in the average daily milk production per cow.

The preliminary estimates of the number of milk cows on farms point to an increased annual average, climbing from 9.041 million head in 2005 to 9.115 million in 2006. Unlike milk production per cow, where year-over-year increases are common, back-to-back increases in the number of milk cows are somewhat rare. Since 1970, the average number of milk cows has increased only 10 times, with back-to-back increases occurring for four straight years from 1980 to 1983 and once again from 1999 to 2000.

Posted January 29, 2007