SMALL ADJUSTMENTS COMING FOR BEEF-ON-DAIRY CALF SUPPLIES
By Ben Laine , Terrain Senior Dairy Analyst
In a time of tight supplies for beef cattle and slim margins on dairies , dairy producers saw an opportunity to breed more of their cows to beef genetics and capture record-high prices for dayold cross calves . The boom in beef-on-dairy breeding has been a lifeline for dairy producers , and it has led to a meaningful flow of dairy-origin cross cattle into beef supply chains .
But with billions of dollars being invested in new dairy processing plants , the market needs more milk . To make it , we ’ ll need more dairy cows . Does that mean an end to the dairy-beef cross supply ?
Probably not . The incentives are still strong for dairies to breed to beef , and it ’ s not an all-ornothing proposition . We ’ ll likely see some shifts in calf supplies as more are bred to dairy genetics , but I expect beef-on-dairy is here to stay . Economics Drove the Evolution
Beef-on-dairy crosses emerged in the mainstream several years ago as an opportunity for mutual benefit to both the beef and dairy sectors . For dairy producers , incorporating beef genetics brought higher values for beef-sired calves compared with the low-to-negligible value for male dairybreed calves . It also enabled dairies to reduce the number of heifers they retained when feed was expensive and the cost to raise or buy a replacement was high . On the beef side , beef-ondairy provided a more consistent , higher-quality animal compared with the traditional straight dairy supply .
It ’ s important to bear in mind that all cattle eventually end up in the beef supply , and dairy cows aren ’ t having additional calves because of these programs . These are just changes to the quality and the timing of where dairy-origin animals enter the beef supply chains . More Dairy Heifers Needed
A major development in dairy markets in 2025 is that several new or expanded dairy product ( especially cheese ) processing plants are coming on line . These plants will need to be filled with milk . But with stagnant milk cow inventories and low heifer numbers , it ’ s hard to see where the milk is going to come from .
The number of milk cows in the U . S . experienced a recent history peak in 2021 just above 9.5 million cows . We ’ re starting 2025 with just under 9.35 million . With fewer cows , and more of them being
bred to beef , we ’ re starting 2025 with the smallest number of milk replacement heifers since the 1970s at 3.9 million .
One of the benefits of breeding more heavily to beef is that dairies have focused on more selectively retaining the genetics of only their highest-performing milk cows . As a result , milk cows today produce more milk and , more importantly , more of the valuable components like milkfat and protein that manufacturers need to meet the growing demand for products like cheese and butter . While we might not need quite as many cows today as we would have in years past to produce the amount of components we need , we ’ ll still need more cows . That will require a shift back toward breeding more dairy replacement heifers and fewer beef-ondairy crosses . Impact on Beef Markets
Some dairy producers in 2025 will consider the choice between continuing to capture exceptionally high beef-cross calf prices or forgoing that quick-cash option in favor of starting to rebuild their replacement supply with an eye toward expansion in the long term . However , I don ’ t expect this to dramatically alter the course of beef supply from dairy in a negative way .
Any impact to the beef supply will be minor . The decision for a dairy to breed to beef is not about whether to do it at this point ; it ’ s more about what portion of their herd will be bred to beef versus sexed dairy semen . Many may marginally shift toward breeding more dairy heifers , but they will not abandon their lucrative beef-on-dairy programs . Long-Term Outlook
Cycles will come and go . Milk will become more profitable and beef cattle prices will cool off . But the potential for beef-on-dairy to provide a win-win situation for both sides of the equation will continue .
The dairy industry will continue to be an important partner to beef . That partnership is becoming more strategic and mutually beneficial , but dairy is a long way from tilting the scales on total beef supply .
Terrain is a team of economists who provide expert analysis to the customers of American AgCredit , Farm Credit Services of America and Frontier Farm Credit . Learn more at Terrainag . com .
18 MARCH 2025 www . NCBA . org