Mike Pearson takes a look at a report from CoBank that sheds some light on a changing dairy industry.

The report examines dairy heifers, beef on dairy calves and the future of milk production in the future.

The cost of raising a dairy heifer has increased to $2,000 per head making it the third most expensive cost for dairy producers, putting it just behind feed and labor.

The significant increase in cost which has been more than 50 percent has pushed dairy farmers to rethink their strategy.

Traditionally, dairy heifers were a profit making venture but times have changed.

Now, Dairy producers are losing money on dairy heifers facing them to forge a new course.

They are using beef semen to breed a portion of their dairy heifers creating beef on dairy calves.

This helps these valves perform better in feed yards creating a marketing opportunity.

At the same time, this reduces the number of dairy heifers available.

The report from CoBank says dairy heifers are a 20 year low but replacements are costing more.

This could shrink the diary cattle supply and significantly decrease milk production in the USA in the future.

Meanwhile, sales of beef semen have nearly quadrupled and the sales of dairy semen have fallen by 5 percent.

In 2022, dairy replacement prices have climbed to highs not seen since 2015.

In 2016, there were 220,000 beef on dairy cattle, then in 2020, the count increased to 1.6 million. And in 2022, the number increased to 2.6 million.

Also, dairy on beef was 7 percent of the total of fed cattle in 2022.

Farm Progress America is a daily look at key issues in agriculture. It is produced and presented by Mike Pearson, farm broadcaster and host of This Week in Agribusiness.