California dairy farmers are retrenching amid falling prices and drought in the largest milk-producing state, a shift that could further reshape the U.S. industry by enabling farmers in other states to expand.
California producers, who pump about a fifth of the nation’s milk supply, say they’re struggling to maintain output as they weather a precipitous slump in the global dairy market and grapple with rising feed costs stemming from yearslong drought. Their travails are prompting at least one large milk processor—California Dairies Inc., a cooperative with nearly $5 billion in annual sales—to limit investments in milk-handling capacity.
In California, “I think we have seen as high as the milk production is going to get,” saidEric Erba, chief strategy officer at California Dairies, which says it produces about 9% of the nation’s raw milk.
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