Dairy industry consolidates

ST. PAUL, Minn. — Across Minnesota in 2025, there was a decline in the number of dairy farms, but the number of cows has stayed consistent to previous years.

During 2025, farm numbers dropped from 1,689 dairy farms in January to 1,665 in December according to the Minnesota Department of Agriculture.

“Over my 25-year career, I always keep a chart on my wall,” Thom Petersen said. “When I started keeping the chart 20 years ago, we had almost 8,000 dairy farms. Now, I think this month our permitted number is 1,650, and it’s been a steady decline. This last year was probably the slowest loss we’ve seen, but we also have fewer farmers to lose.”

Petersen, commissioner for the MDA, has been in this role since 2019 and was reappointed in 2023.

The overall count for dairy farms includes both bovine and caprine farms. Petersen said he has seen growth in the dairy goat industry, with most of it due to dairy goat startups rather than farmers transitioning from cattle to goats.

The industry did see a rise in farm numbers during the summer as dairy goats began milking for the season. But, these numbers dropped towards the end of the year.

“I really see some opportunities for goats as we do see interest in goat milk and cheese, especially, rising,” Petersen said.

According to the U.S. Department of Agriculture’s National Agricultural Statistics Service quick stats, Minnesota had 14,000 goats as of Jan. 1, 2025, and 14,500 to start this year.

As of December 2025, Stearns County leads with 323 dairy farms, followed by Todd County with 122 dairy farms, Morrison with 115 dairy farms, Winona County with 94 dairy farms and Otter Tail County with 82 dairy farms as the top five counties in the state.

“Passing the farm to the next generation is really key,” Petersen said. “That’s something that we continue to work on and look at.”

Throughout the years, Petersen said he has seen farms in the industry consolidate as automation has become prevalent. Over the last 10 years, the number of farms has declined, but the number of cows within the state has remained similar from year to year. According to the USDA NASS quick stats, Minnesota began 2024 with more than 450,000 cows, 2025 with 440,000 cows, and 2026 with 455,000 cows.

Petersen said challenges he sees in the dairy industry include prices for milk, cattle and inputs. He said farmers are struggling with increasing interest rates as well.

“If we can get a decent milk price or a stable milk price, I think that would be really helpful,” Petersen said. “It’s just so unpredictable and it’s hard to ride the waves sometimes. The price of cows right now is really tough if you’re trying to get in or expand your herd. Then, input costs for farming in general, we’ve heard a lot about that.”

The Dairy Margin Coverage program, the Dairy Assistance, Investment and Relief Initiative, cull cow prices and calf prices have helped farmers get through volatile milk prices, Petersen said.

Dairy Business Planning Grants, Agricultural Growth, Research and Innovation Program grants or low-interest loans like Beginning Farmers and Ranchers Loans through USDA’s Farm Service Agency, Restructure II Loan Program through MDA, and other loans through FSA are available for farmers to improve finances. Whether using for buildings, cattle or equipment, Petersen said there are many loans and grants available for producers.

As for beginning farmers, there is help available as well.

“Minnesota has some of the best programs in the country,” Petersen said. “We have a beginning farmer tax credit, so if you are a beginning farmer and you’re buying or renting or leasing from a farmer. … You can get anywhere from 8% to 12% tax credit for that seller. It’s kind of an incentive, so that’s a really good program.”

Petersen said there is a down payment assistance program for up to $20,000 per farm, too.

Another avenue is MDA’s work to increase demand for milk.

“We’ve been working on continuing to grow milk in schools through different programs as we try to keep that next generation going,” Petersen said.

MDA is also trying to find a unique platform to assist smaller farms as well, Petersen said.

“There’s a niche there for farmers on the smaller end to be able to tell their story on things like their carbon footprint and other things like that,” he said. “(Regarding) organic, we are still seeing continued, steady growth and that’s going to help or provide opportunities for folks on the smaller end.”

The dairy industry continues to remain vital in Minnesota, Petersen said. Last year the state remained among the top 10 dairy states in the U.S. The value of the dairy industry extends from the processors who hire many employees to the dairy farms themselves and their impact on their local communities Petersen said.

“Dairy farms are incredibly important,” Petersen said. “All the businesses associated with a dairy farm … whether it’s the veterinarian, the feed person or the fuel, all these different (businesses) a dairy farm just depends on, and (it) drives a community so much. … There’s just so much industry within dairy (as a whole) that …. sometimes we take it for granted, but it is an incredibly important piece of agriculture in Minnesota.”