Texas dairy producers offset lower milk prices with higher calf prices

The beef-on-dairy breeding program is as much or more of their business as the milk marketing, said AgriLife Extension dairy specialists Jennifer Spencer, Ph.D., assistant professor, Stephenville, and Juan Piñeiro, DVM, Ph.D., associate professor, Canyon, both in the Texas A&M Department of Animal Science.

“Today, dairies are depending more on calf prices, where beef-on-dairy calves have gone from $600 per calf in 2024 to as high as $1,500 per calf for Holstein/Angus cross calves now,” Piñeiro said.

He said recent data from CattleFax indicated 3.22 million beef-on-dairy animals were sold in 2024, where 10 years previously, there were only 50,000 head sold. This is also helping the dairy industry fill supply gaps within the beef industry amid historically tight cattle supplies.

In the marketplace

The Southwest Marketing Area Market Administrator’s Jan. 13 report showed Texas milk production increased by 1.2 billion pounds from 2024, increasing from 17 billion pounds in 2024 to 18.2 billion pounds in 2025.

Spencer and Piñeiro said this is primarily due to the increased number of dairy cows in the state, as well as improved genetics, nutrition and practices that promote cow comfort.

The Statistical Uniform Price report showed milk prices decreased from $20.55 per hundredweight in December 2024 to $16.93 per hundredweight in December 2025. Cheese prices also decreased from $18.62 per hundredweight to $15.86 per hundredweight, for the same time periods.

Butter prices declined the most, from $2.50 per pound in July 2025 to $1.50 per pound by December, according to the report.

The price of butter is going down because cows are producing milk with higher butterfat content due to genetic and nutritional improvements, Piñeiro said. It’s a case of supply and demand. Dairy producers don’t get paid by fluid milk, but rather by milk components such as butterfat and protein. While the protein price has gone up slightly, the increase in butterfat has prompted those prices to decline.

Texas dairy consolidation continues

Overall, consolidation continues among Texas dairies, with operation numbers decreasing, but the number of dairy cows increasing, Spencer said.

According to the U.S. Department of Agriculture National Agricultural Statistics Service, Texas lost 10 dairies in 2024 and another 10 in 2025, going from 294 to 274 in the past two years. Cow numbers, however, increased from 675,000 to 705,000 head in the same period.

Based on the current and expected milk processing capacity, both Spencer and Piñeiro said that Texas milk production is expected to continue growing in 2026 but at a slower rate compared to the previous 10 years.

Some of that slowdown is due to dairy expansion in other states. An example of this is the considerable expansion in western Kansas over the last three years. Another part, Piñeiro said, is the ongoing water challenges in the Texas Panhandle.

Piñeiro said from 2016 to 2021, Texas milk production increased at an average rate of 7.6% per year. From 2024 to 2025, it slowed to 7%. Similarly, from 2016 to 2021, Texas dairy cow inventory increased at an average of 4.6% per year. From 2024 to 2025, that growth was at 4.4% per year.

“Keeping the same high rate of expansion we have had for the last 10 years would be challenging as more cows would demand more forage production and more forage production would demand more water,” he said.

AgriLife Extension district reporters compiled the following summaries:

Panhandle

Very dry conditions persisted, and moisture was needed for winter crop improvement. Overall, soil moisture was reported from very short to short. Supplemental feeding of cattle continued. Pasture and range conditions were very poor to fair. Winter wheat conditions were poor to fair.

South Plains

Beneficial moisture fell and, along with the snowfall melt, improved subsoil and topsoil moisture levels. Producers were preparing for the planting season and planting wheat. Livestock were in good condition and were utilizing supplemental feed. Producers were performing equipment maintenance and preparation for spring planting.

Rolling Plains

Recent rainfall brought welcomed relief, with totals generally ranging from about 0.4 of an inch to 2.5 inches. While conditions remained dry overall, the moisture and warmer temperatures led to modest improvements in soil moisture, winter wheat and pasture conditions. Producers continued to rate most of the wheat crop as fair, but additional moisture was needed for further improvement. Wheat grazing picked up, and livestock on wheat were showing better condition, but supplemental feeding remained necessary due to limited forage availability. Pastures and rangeland were expected to gradually improve, with early growth such as wild rye anticipated. The recent rains may also help set the stage for spring planting and hay production. Calving season was in full swing and branding activity increased; and cattle body condition was generally strong with continued supplemental feed. Some calves held back from market last fall were being sent to local sale barns.

North

A huge storm brought much-needed rainfall; some counties received up to 3 inches, causing flooding in some low-lying areas. The rainfall should help the soil moisture levels improve significantly. Topsoil and subsoil levels were adequate to short, and pasture and range conditions were fair to good. Wheat and oats were still in vegetative growth stages, and some growers were seeing minor damage from the late winter freeze and ice. Hay feeding continued. Grape vines were being pruned. The fire ban continued for Van Zandt County. Ponds, lakes and tanks were low. Livestock conditions were good. Livestock lice populations were on the rise.

East

Some rainfall was received, but not enough to relieve drought stress. Pasture and rangeland conditions were fair. Subsoil and topsoil conditions were adequate. Cool-season forages were growing some with the recent warmer weather. Producers were spraying preemergent herbicides for sandburs in pastures and hay meadows. Livestock were in fair to good condition with supplementation taking place. Cattle markets remained strong. Gregg County reported continued issues with gophers and moles.

Far West

Topsoil and subsoil moisture levels ranged from very short to short in most areas. Cooler temperatures and scattered precipitation benefitted crops and pastures, but rainfall did not impact soil profiles or drought-stressed rangeland. Fieldwork continued with little interruption, and preparation for spring planting advanced in many areas. Winter wheat, oats and other small grains showed mixed recovery depending on stand maturity and recent moisture. Pasture and rangeland conditions across the district were mostly poor to very poor, reflecting prolonged dryness and minimal forage availability. Livestock conditions were fair to poor, supported by supplemental feeding as producers responded to limited forage growth and ongoing dry conditions. Lambing and calving activities were underway, and wildlife activity remained steady.

West Central

Conditions were mostly warm and dry with rain showers late, but area conditions remained extremely dry. Winter wheat needed moisture and some fields still looked yellow from the recent freeze but were expected to recover. Some producers were beginning to do fieldwork for spring-planted crops. Pasture and range conditions were average to better than normal with warmer weather creating some good grazing conditions for livestock. The cattle market continued to be very strong with good demand and activity across all classes.

Central

Ice melted, providing some moisture, and temperatures were above normal. Wheat and oats suffered notable freeze injury. Some fields were beginning to recover, while others had not shown much improvement and may have lasting stand loss. Spring planting preparations were underway. Corn planting operations began on a limited basis. Gardeners were busy planting onions and preparing for the new growing season. Disease and insect pressure remained low. Despite the dry conditions, rust was found in some grain fields. Very little grazing was available on pastures and rangeland due to limited moisture. Livestock were in fair condition with supplemental feeding, but the big hay crop was dwindling quickly. Cattle prices remained very strong.

Southeast

High temperatures and emerging weed pressure were common, while limited rainfall offered only modest relief to dry conditions. Soil moisture levels varied from very short to adequate, depending on localized rainfall. Cool-season forages such as oats and winter wheat continued to recover from recent freeze events, with some fields beginning to head out, though additional moisture was needed to support stronger growth moving forward. Pasture and rangeland conditions were poor to excellent, with many areas still showing significant drought stress. Livestock remained in fair to good condition overall, supported by supplemental feeding where needed.

Southwest

Drought conditions persisted with warmer temperatures and breezy weather. Weekend showers produced trace amounts up to 1 inch of rainfall. Although limited, the recent moisture helped slightly green up rangeland and pasture conditions. Row crop farmers and gardeners were preparing to plant. Hay stocks were dwindling, and some hay producers were running pasture renovators or applying glyphosate to fields. Irrigated crops continued to look good. Non‑irrigated pastures were declining, and supplemental livestock feeding remained necessary. Livestock conditions remained fair to good overall. Lambing and kidding were underway. Burn bans were reinstated for some counties.

Coastal Bend

Warmer weather and rainfall occurred late in the week, with most areas receiving between 0.3 of an inch and 1 inch. Although the rain did not relieve drought conditions, it did green up winter grasses. Range and pasture conditions remained mostly poor due to the lack of moisture. Corn planting started.

South

Conditions were very dry. Daily highs were generally in the 60-80-degree range with lows dropping into the 30-50-degree range. Topsoil and subsoil moisture levels remained very short to short. Oat and wheat fields were surviving under irrigation but dryland fields looked sparse. Strawberry production was mixed; the freeze slowed production. Producers reported cold damage in spinach, arugula, broccoli, onions and cabbage. The onion crop harvest should begin in a few weeks. Some row crop producers began planting corn, and grain sorghum planting should begin in a few weeks. Citrus and vegetable harvest activities were ongoing. Some areas reported no water in the local irrigation canals. The persistent lack of rain keeps range, pastures and vegetation under drought stress. Livestock producers were providing supplemental feed as pasture conditions declined, but hay supplies were tightening and increasingly difficult to source. Cattle body condition was generally fair but closely monitored due to limited forage availability, and producers continued to cull deep in their herds. Wildlife populations were seeking food closer to towns, roadways and rural residence areas. Quail hunters reported strong bird numbers. Wildlife producers were supplementing with corn, protein and cottonseed.