US dairy sector must continue cow slaughter

The US dairy industry needs to reduce the cattle herd by another 200,000 head in order to return balance to supply and demand.

The industry is rapidly reducing its 9.3 million herd size, with over 208,000 milk cows removed from the herd in the past nine months, according to Ohio State University dairy economist Cameron Thraen.

But that reduction is insufficient as it still exceeds local demand, and the industry needs to size down more to reach about 8.9 to nine million head, said Thraen.

Milk prices exploded several years ago, encouraging dairy farmers to expand herds. But the bubble was burst by the global recession, which quickly dragged down prices. Dairy prices in Ohio fell from US$19.83 per 100 pounds in July 2008 to US$11.97 seven months later, while feed prices and other expenses did not decrease.

Thraen added that while the world economy will recover and demand will return, it will not go back to the levels of 2007 and 2008.