Dairy farmers today have a rare opportunity to make money from both beef and dairy sales, but the paydays are different.
Beef-on-dairy cross calves offer an immediate return, while raising dairy replacements from birth to maturity requires a two-year investment before they produce milk.
Long term, both markets appear sustainable, according to Abbi Prins, an agricultural commodities economist for CoBank, who pointed out that strong consumer demand for high-quality protein is driving record beef prices and double-digit growth in protein-rich dairy products.
Heifers record high prices
Dairy replacement heifer numbers peaked 10 years ago at 4.8 million. Since then, Prins said, both inventory levels dropped.
“Declining heifer supply and healthy demand for more milk components caused the heifer price to skyrocket,” Prins said. “Prices for replacements climbed 73% to a nationwide average of over $3,000 per head.”
Still, those prices from the USDA Agricultural Prices report were conservative compared to what’s happening in the marketplace now.
Market prices are even stronger, Prins said, with dairy replacements fetching $3,400 to $4,400 in Minnesota and Wisconsin auction markets earlier this year.
New processing capacity creates demand for additional milk, which creates regional demand for replacement animals. New York, Texas, Wisconsin, Michigan, Idaho and the I-29 corridor — including western Iowa, western Minnesota and South Dakota — top the list for the $13 billion in new dairy processing investments.
“This demand for milk will cause dairy replacement values to be higher in these regions,” Prins added.
While beef-on-dairy provides a relatively quick return, rebuilding a dairy replacement inventory requires a much longer view — and that’s where semen decisions come into play.
A triple play for semen
Dairy farmers are using technology to control the destination of each calf before it is born.
- sexed semen for future herd replacements
- genomic testing to identify the best dairy heifer calves
- beef semen on the rest of the dairy herd
“This caused a historic shift in U.S. semen sales,” Prins noted.
Dairy farmers moved away from using conventional dairy semen to focusing on gender-sorted dairy semen to produce a dairy replacement heifer and beef semen to produce a beef-on-dairy calf.
“Dairy operations are better able to manage their outcomes and capitalize on higher revenue streams if they know the career path of the calf before it is conceived,” she added.
Rebound on the way
Because a calf born from a 2023 breeding decision does not enter the milking herd for three years, the impact of beef-semen decisions is just now showing up in replacement numbers, Prins explained.
It’s expected there will be 438,800 fewer heifers entering dairy herds this year, based on CoBank’s forecasting model. Farmers should keep in mind that these are forecasts based on national averages of conception rates, pregnancy loss, birth rates and completion rates, which will vary by region.
Gender-sorted semen is leading the rebound in replacement heifers.
In 2024, 1.5 million additional units of gender-sorted dairy semen was sold to U.S. dairy farmers. In 2025, 700,000 additional units were sold.
More sexed semen means more dairy heifer calves and more replacements entering herds in 2027.
“This change in gender-sorted semen units tells us that instead of searching for replacement heifers, dairy farmers are making their own to help fill the needs of their operations,” Prins said.
And that replacement rebuilding starts next year:
- 285,400 more heifers in 2027
- 74,900 more heifers in 2028
While beef-on-dairy can put dollars in the bank today, strategic replacement decisions and semen choices determine how dairy farms capture value from the milk market in the years ahead.
Read more from CoBank: Dairy replacements should begin a slow rebuild in 2027 and 2028