The economics of dairy production

Milk production in the United States has slowly increased, with large increases in milk per cow resulting in fewer total cows on fewer farms with larger herds. The changing structure of the dairy farm industry has not occurred uniformly across regions, with the Pacific and South dairy regions growing much more rapidly than the traditional dairy-producing regions. Examining economic factors reveals that economies of size, asset fixity and adjustment costs, specialization, and milk price play important roles in influencing the structure and evolution of the industry.