Dairy: Supply and Demand Stories

Here’s a modest puzzle: The quantity supplied of milk is way up, but the price is also way up. One usually expects higher supply to drive down the price. What’s happening? Here’s a meandering commentary on supply and demand in US dairy. On the supply side, Jeffrey Gillespie and Eric Njuki of the US Department of Agriculture discuss “Fewer Farms, More Milk: The Changing Structure and Costs of U.S. Dairy Farming” (Amber Waves, Februar 23, 2026). The pattern over the last couple of decades is fewer herds of dairy cattle, but bigger herds, along with a substantial rise in milk output. Gillespie and Njuki write: “Increasing adoption of new technologies and advanced management practices are among factors that have contributed to increasing productivity of cows on U.S. dairy farms. Between 2000 and 2021, advances in genetics, nutrition, and technology increased average milk yields per cow, and the market share of sales coming from farms using those advanced technologies and practices…