The U.S. dairy industry stands at a unique inflection point previously unseen in its modern-day history: Beef sales are contributing a larger portion to dairy farm profitability with each passing year. This market dynamic has pushed dairy farmers to send more calves to beef feedlots via the beef-on-dairy movement and fewer calves to milk barns, says Corey Geiger, CoBank lead dairy economist.
“As a result, if you are a dairy farmer looking to maintain or grow your herd, higher heifer prices have caused that ‘dairy replacement acquisition’ line item on the ledger to double and nearly triple in cost,” Geiger says.
To solve for the situation, U.S. dairy farmers made significant changes in semen purchases, based on data from the National Association of Animal Breeders.
“From 2023 to 2024, gender-sorted semen sales grew by 1.5 million units and represented an incredible 17.9% growth rate in just one year,” Geiger says. “Conversely, conventional dairy semen purchases, resulting in a 50-50 chance of a heifer or bull calf, fell 800,000 units and represented an 11.4% downturn. At the same time, dairy farmers kept their eye on the beef-on-dairy prize as beef semen sales to dairy farmers held steady at the record 7.9 million-unit threshold.
”These NAAB sale trends show that U.S. semen sales to dairy farmers are quickly consolidating into two major product categories: gender-sorted dairy semen to produce a dairy replacement heifer and beef semen to produce a beef-on-dairy calf.
Geiger believes this data serves as a foundation to forecast the future. “The 2024 NAAB sales data, when combined with some biological facts, allows us to forecast future herd replacements,” he says. “The 2024 sales year is the best place to start, as it represented the largest one-year shift to gender-sorted semen, with an additional 1.5 million units sold, and an 800,000-unit downturn in conventional dairy semen. Beef semen sales remained constant from 2023 to 2024 at 7.9 million units.”
To forecast eventual live births and full-grown dairy replacements eligible to enter the milking herd, CoBank analysts developed multiple modeling assumptions from scientific research reports, national records analysis and consultation with dairy reproduction specialists.
When applying 2024 NAAB semen sales to this model, a potential net gain of 285,387 dairy heifers is available for herd replacements in 2027 when compared to 2026 numbers.
“This number came from 425,454 additional dairy replacement heifers potentially entering the milking herd from gender-sorted semen usage,” Geiger notes.
Likewise, the model found conventional semen produced 140,067 fewer dairy heifers. With no change in beef semen sales, there were no further impact changes.
That’s the good news if one is looking for more dairy heifers, Geiger says. “However, the other part of the story is that fewer dairy heifers will be available both in 2025 and 2026, and that means the 20-year low in dairy heifer inventories will fall even further near term,” he adds.
The 2022 sales year indicates fewer heifers available to ener the dairy cow herd in 2025.
“The model predicted 357,490 fewer dairy heifers for 2025 when compared to the prior year,” Geiger says. This was driven by:
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221,625 more beef-on-dairy calves born that year
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192,592 fewer dairy calves reaching the completion rate threshold due to lower conventional dairy semen sales
• 56,727 more dairy replacements resulting from gender-sorted semen sales
The 2023 sales year also predicts fewer heifers available to enter the dairy cow herd in 2026, Geiger says. For that year, the model predicted 438,844 fewer dairy heifers when compared to 2025. This was driven by:
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398,925 more beef-on-dairy calves born that year
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198,925 fewer dairy calves reaching the completion rate threshold based on lower conventional dairy semen sales
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170,181 more dairy replacements resulting from gender-sorted semen sales
No model is perfect, Geiger notes; however, a model can help predict the future.
“To that end, this model predicts that dairy replacements will remain historically tight through 2026,” he explains. “To maintain cow numbers and the necessary milk production levels, dairy farmers will have to reduce dairy cow culling even further. This will be incredibly difficult given the existing pullback in culling over the previous two years.”
This aging herd brings a unique set of management challenges as older dairy cows are more susceptible to fresh-cow diseases, metabolic issues and declining fertility rates.
“The good news is that genetics and health traits have improved over the past decade, and the modern dairy cow should be more up to the challenge,” Geiger says.
“Lastly, remember that this 285,387-head forecast is net improvement in dairy replacements compared to the prior year,” he says. “Dairy heifer replacement inventories were already at a 20-year low, and it will take many more dairy heifer calves in future years to bring the national herd back to historic levels. This would be the reason gender-sorted dairy semen sales continue to grow given dairy farmers desire to reap financial rewards from record beef prices.”
Source: Farmprogress.com / Fran O’Leary
