Structural Change and Relocation of the U.S. Dairy Industry: Drivers and Implications

This study examines structural and geographic shifts in U.S. dairy production from 2002 to 2022 using county‑level data across 48 contiguous states. Dairy operations have been operating with tight profit margins for decades, and persistent pressures from rising input costs, volatile milk prices, and regulatory burdens have accelerated consolidation and regional relocation. Using augmented USDA Census and survey data for 1,498 counties, we measure changes in operation numbers and herd size and classify counties into four structural‑change pathways: consolidation, decline or exit, growth or entry, and de‑consolidation. Ordinary Least Squares and logit models identify how variation in feed resources, land constraints, labor conditions, regulatory pressure, and environmental factors drives county‑level structural change. Results indicate that consolidation is most pronounced in counties with greater cropland resources, higher agricultural land shares, stronger labor availability, and cost advantages in meeting regulatory requirements. Counties to the west of the 100th Meridian are far more likely to experience substantial increases in herd size, reflecting lower land costs, drier climates, and the expansion of confinement‑based systems. Grassland‑dependent regions and small counties face higher risks of decline or exit. Overall, economic factors dominate the restructuring of the dairy sector, contributing to continued consolidation and westward concentration with implications for long‑term industry sustainability.