Texas Dairy Producers Face Challenges Amid Good Milk Prices

Texas dairy producers continue to face challenges despite favorable milk prices over the past year, according to a Texas A&M AgriLife Extension Service expert.

Jennifer Spencer, Ph.D., AgriLife Extension dairy specialist, Stephenville, said milk prices remain historically good for producers, and demand continues to be strong for milk and milk products from cheese to ice cream. But higher input costs are eating into profitability, she said.

Spencer said Texas continues to perform well and add dairy capacity and cows. Texas moved past Idaho to rank third nationally in milk production for the first six months of 2022. However, summer heat led to reduced production and Texas finished fourth for the year.

Texas dairies produced 15.1 billion pounds of milk as of Dec. 1 which was 6% above the same time last year. Spencer expected the 2022 total to be near 16 billion pounds by year’s end compared to 15.6 billion pounds in 2021, according to the U.S. Department of Agriculture. 

Prices remained above $23 per hundredweight after fluctuating between $23-$25 per hundredweight in 2022, she said. The average price per hundredweight was $23.67.

But dairy producers faced more challenges this year as higher costs cut into potential profits, Spencer said.

Feed costs represent about 60% of dairy producers’ expenses in an average year, she said. This year, drought and high fertilizer costs impacted forage yields, and prices for grains and supplemental feed like cotton seed increased dramatically as well.  

Fuel costs and labor shortages also hindered dairy operators more than a typical year, Spencer said.

“There was more opportunity for dairy producers to be profitable in 2021 because they didn’t have to struggle to keep up with feed and other rising costs,” she said. “It was a challenging year despite the good prices.”

Texas dairies continue to follow industry trends that show dairy size and overall production are rising as the number of operations declines.

Texas dairy production set to expand

Texas could see significant growth in dairy production over the next several years as processing capacity expands to handle milk. Multiple processing facilities dedicated to soft cheese products like cottage cheese, cream cheese and other spreadable cheeses are slated to expand or open over the next two years to meet growing demand.

Cheese production was the major destination for the 226 billion pounds of milk produced in the U.S. in 2021. It takes 10 pounds of milk to make 1 pound of cheese.

A facility in Amarillo will open later this fall, while facilities in Stephenville are expected to expand. Another facility in Lubbock is expected to open in 2024, and a new facility in western Kansas is expected to pull some milk from the Texas Panhandle.

Around 80% of Texas milk is produced by dairies in the Texas Plains.

“Texas dairies added about 25,000 cows to their production capacity this year, and the processing expansion will help producers add to that growth,” she said. “Processing capacity is one of the limiting factors holding production back.”

Liquid milk consumption continues to decline, but dairy products for lactose intolerant consumers continue to trend upward, Spencer said. Ice cream demand during the summer typically results in seasonally higher milk prices.

Whey, which goes into products like muscle recovery powders and baby formula, has become a growing piece of dairy demand, Spencer said. It is a byproduct of cheese production and was considered waste before a use was found for its 99% amino acid protein.

Spencer said consistently expanding dairy options for consumers is driving expansion of overall U.S. production.

“Producers are very progressive in Texas, and so they are adapting to the challenges to maintain production and profitability,” she said. “The demand is there, and I think there is an opportunity for Texas dairy production to continue growing.” 

AgriLife Extension district reporters compiled the following summaries:

CENTRAL

Most of the district received 0.5-1.5 inches of rain. Recent precipitation improved soil moisture, but pastures were still in poor condition due to the hard freeze and drought. Warmer temperatures should improve pasture conditions. Livestock were receiving heavy supplemental rations. Hay supplies were extremely low. Wheat and oat conditions were improving. The moisture should help the upcoming corn plantings.   

ROLLING PLAINS

Some areas received additional rains with some counties reporting up to 1.5 inches. Wheat continued to improve with the recent moisture, but more precipitation will be needed to continue the progress. Rangeland and pasture conditions were improving and warmer days in the forecast should help. Wheat conditions improved dramatically in some areas, especially in fields fertilized before the rains. Winter supplemental feeding continued for livestock, but some producers were grazing wheat. Pasture grasses were also perking up following the moisture improvements. Hay was in short supply. Cattle body conditions were fair, but heavy rations of feed were needed to maintain their condition. Cows nursing calves were showing body condition declines. 

COASTAL BEND

Most of the district received rainfall, which ranged from drizzle to heavy rains. Temperatures remained cool. Soils remained saturated with good subsoil moisture. Grain producers prepared equipment for planting while others finished fertilizing. Some fields were soggy, and producers held off on planting corn until they dried out. Winter pastures were producing well. Some oat pastures neared the point of grazing. Pastures remained mostly dormant, and livestock producers fed hay and protein. Extra supplemental feeding was still necessary as hay remained in short supply. Cattle were in good condition, and prices were steady.  

EAST

Field and pasture conditions were soggy. Many counties reported pastures and fields were too wet to work in and equipment was getting stuck. Subsoil and topsoil conditions were adequate. Stock ponds and creeks were full. Pasture and rangeland conditions were fair. Livestock were in fair to good condition with supplementation taking place. Some producers were beginning to feed more cubes due to limited hay supplies. Flooded bottoms pushed feral hogs into more visible locations, and their activity had increased. 

SOUTH PLAINS

Final cotton totals were extremely low. Heavy winter moisture, including snow, sleet and rain was reported. Livestock were in good condition, but the weather was hurting wheat production. 

PANHANDLE

The Panhandle received some snow flurries, but no major accumulation was reported. The district remained very dry. Soil moisture levels were very short to short. Winter wheat was struggling due to the lack of moisture. Pasture and rangeland conditions were very poor to poor. Supplemental feeding of livestock continued. 

NORTH

Soil moisture levels were short to adequate. Most areas were short on moisture, but producers in other areas were dealing with extremely wet conditions. A light freeze occurred. Some counties were struggling to recover from the hard freeze earlier this winter. Most ponds were filled by the rainfall. Wheat and oat conditions were improving. Hay was still in short supply in some areas. Cedar tree pollen was high. Livestock conditions were good. No insect or disease outbreaks were reported.

FAR WEST

Days were cold and wet then warm and dry. Daytime temperatures ranged from the mid-50s and lower 60s with lows in the mid-20s. Fieldwork picked up throughout the district as growers began discing or throwing up beds in preparation for corn or cotton planting. Orchard floor cleanup and pruning continued for pecan operations. Some farmers were hitting orchards and remaining alfalfa fields with irrigation still available from the water district. Irrigation was expected to increase in the coming weeks. Pastures were still bare with just a few weeds emerging. Livestock were in poor to fair condition and receiving supplemental hay and feed.

WEST CENTRAL

Topsoil moisture was decent following rain showers and the ice storm. Some field cultivation occurred before the most recent rainfall. Some small grain fields were top dressed with fertilizer before the rain and should respond favorably. Warmer, sunnier days were in the forecast. Pastures were still short on grazing, and producers were feeding livestock hay and supplements.

SOUTHEAST

Temperatures were milder. Soil moisture levels were adequate to surplus. Water was still standing in some fields following heavy rains. Conditions were muddy. Warmer conditions and improving pastures resulted in a stronger calf market. Wheat planting was behind schedule due to rain and soggy fields. Rangeland and pasture ratings were very poor to excellent. Conditions were favorable for planted wheat, ryegrass and other forages. Some green up was noted in pastures, including broadleaf weeds. Corn planting should start soon but wet fields could delay. Rains replenished stock ponds.

SOUTHWEST

Moisture conditions improved, but some areas remained dry. Trees were damaged by ice, and orchard operators were pruning trees and removing debris. Corn planting was expected to begin soon. Wheat and oats looked fair to good under irrigation, and very few winter weeds were emerging. Supplemental feeding for livestock continued but decreased. 

SOUTH

Soil moisture levels were very short to short in most areas with some southern areas reporting adequate soil moisture. Temperatures were cooler, with windy conditions and some scattered rainfall reported. Daytime high temperatures reached near 80 degrees. Producers were preparing for planting and monitoring soil moisture levels. Corn planting should begin when soil moisture becomes adequate for germination. Corn, sunflowers and sorghum were being planted in southern areas of the district with adequate moisture, but a rain would help those fields. Some planted fields were irrigated. Vegetable producers were harvesting cool-season crops. Onion yields looked good. Citrus and sugarcane were also being harvested. Pasture and rangeland conditions were poor, and grazing was limited in most areas, but some decent grazing was reported in southern parts of the district. Hay and feed prices continued to increase as producers continued to supplement livestock rations. Producers continued to cull bulls and cows, and market prices were strong to steady. Livestock were in decent shape. Mesquite trees were putting on leaves, and black brush were blooming. Wheat and oat fields were in good condition but dry conditions and freezing temperatures were showing in some fields.