Center for Crop Diversification Guest Blog: Kentucky Dairy in 2025 - Opportunities and Challenges Ahead
Written By Camille Stevens, Center for Crop Diversification
As we enter 2025, Kentucky’s dairy industry is poised for a year of favorable conditions, building upon the successes of 2024. The previous year was notably profitable for dairy producers, with higher farm-level milk prices and lower feed costs contributing to margins unseen since 2014. While a slight moderation in prices is anticipated, the overall outlook remains positive.1
On a national level, the dairy sector is expected to maintain its strength into 2025. The USDA projects that domestic dairy use will continue to rise, supported by lower cheese prices, which should increase demand. 2
Challenges will continue to persist, particularly for smaller dairy operations. The correlation between farm size and profitability has become increasingly evident. Farms milking fewer than 250 cows, which have faced margin losses over the past two years, may find it difficult to recover fully, even with improved milk prices. In contrast, larger farms, especially those with over 5,000 cows, are projected to achieve higher profitability due to economies of scale. 3
The unfortunate consolidation of dairy farms in Kentucky continues; however, those still remaining in the industry can find the use of value-added processing to offer a pathway to greater profitability. Smaller farms, especially, can thrive by creating unique products that differentiate themselves from mass-market dairy.
Looking ahead, Kentucky’s dairy farmers are encouraged to leverage favorable market conditions by adopting innovative practices and exploring opportunities for growth. The Kentucky Dairy Development Council (KDDC), Kentucky Center for Ag and Rural Development (KCARD), University of Kentucky Coopertive Extension, and the Kentucky Department for Agriculture continue to support producers through various programs aimed at sustaining and expanding the state’s dairy industry.
While 2025 presents a promising landscape for Kentucky’s dairy industry, the ongoing trend towards larger operations and the challenges faced by smaller farms highlight the need for strategic planning and adaption to ensure long-term sustainability and profitability. As always, we are the Ag-vocates for our Kentucky agriculture industry. Producers - continue to promote buying local and educating consumers on the importance of local foods. Consumers - keep supporting our Kentucky farms by attending farmers markets, visiting farms, and purchasing local foods to help bolster our economic success.
Learn more about the Center for Crop Diversification here.
[2] https://www.ers.usda.gov/topics/animal-products/dairy/market-outlook?utm_source=chatgpt.com