The past few years have seen huge volatility in ex-farm milk prices compared to retail values and the trend is set to continue if the market across The Pond in the US and Canada is anything to go by.

“Dairy farms in the US and in Canada are facing some of the same challenges you are facing here as we are all competing for the same markets – it’s either feast or famine,” said Paul Krueger, sales and global marketing director of Semex USA, speaking at the Semex Conference.

“The business mind of a US farmer has really changed over the years. Dairy farmers need to have a strategy for the future as we are constantly seeing huge changes in the ex-farm value of milk.

“Just before Christmas, the top end of producers in the US were receiving $0.43 per litre which was equivalent to 0.32p here, with the bottom end of receiving $0.30 or 0.22p per litre.

As a result, Mr Krueger said the industry has seen some massive changes in recent years, both in the number of dairy cows and where they are being milked.

Since 2015, dairy herd numbers in California have been on the decline with the rise in demand for almond milk which is mostly produced in the same state.

The traditional family dairy farms in Wisconsin have also had to up their game with several 1000+cow units now. Dairy farmers are also moving closer to the milk processors, with cow and herd numbers increasing in the mid US states of Colorado and western Texas.

He added that since 2009, milk prices have pretty much revolved around a three-year cycle, with 2018 set to be a “down year” for producers.

Yet, while there has been massive expansion in the number of cows being milked on individual units, Mr Krueger said there are still huge difference between the two types of dairy farms.

“The average herd size in Canada and the States is 150cows yet, more than have the cows reside in 900+ cow units and the number of larger herds is only going to get bigger,” he said.

More worrying is the fact that with the volatility in the milk price and future milk contracts gaining steam, Mr Krueger said that by 2027, more than a third of dairy farmers will be lost.

“Last year, there were some 40,000 dairy farms in the US, but that is expected to fall to 15,000 by 2027 with the average herd size rising to 600 dairy cows but with 60-75% of the national herd living in 1000+ cow units.”

Hence, he said producers need to increase their ability to rapidly change for a fast evolving market which would mean more reliance on genotyping, to increase overall production and net margins. This, coupled with increased use of cow monitoring, sensors and better overall management would help to produce better quality heifers that would produce higher milk yields and last longer.

However, he warned that change does not necessarily mean growth. Producers have to have the right system, under the right management to grow and change for the future.