As we near the end of 2025, it gives us a time to look back on the major news headlines of the year.
Right from the start with the passing of the Federal Milk Marketing Order (FMMO) referendum to the ongoing farm bill extensions, here are 10 news items Progressive Dairy followed throughout 2025.
1. FMMO referendum passed
The year began with the USDA’s announcement that the FMMO referendum passed in all 11 FMMOs.
It had been more than 20 years since the last comprehensive revisions were made to the FMMOs and almost a year and a half since the hearing began that led to the most recent proposal, which was up for a vote at the end of 2024.
Each of the FMMOs obtained the necessary two-thirds vote in favor of adopting the amendments and the final rule was posted in the Federal Register on Jan. 17.
The final rule includes the following amendments:
- Increasing milk composition factors to 3.3% protein, 6% other solids and 9.3% nonfat solids
- Eliminating barrel cheddar from milk pricing formulas and the Dairy Products Mandatory Reporting Program. Now, only block cheddar prices are used to determine the monthly average cheese price.
- Increasing make allowances (per pound) as follows: cheese $0.2519, butter $0.2272, nonfat dry milk $0.2393 and dry whey $0.2668. Further, butterfat recovery in the Class III formula increased to 91%.
- Returning the Class I mover to the “higher-of” Class III or Class IV skim milk price. A rolling monthly Class I extended shelf-life (ESL) adjustment is also part of this.
- Altering Class I differentials in some regions.
Most of these took effect on June 1, except for the amendments to the skim milk composition factors, which were implemented on Dec. 1.
As Dana Coale, deputy administrator of dairy programs for the USDA’s Agricultural Marketing Service, shared news of the passage at the Dairy Strong conference, she said, “Based on some of the proposals we received, there are more issues that need to be addressed to further continue the modernization.”
One of those issues is the need to improve milk pricing transparency. About a month later, the Fair Milk Pricing for Farmers Act (S.581) was introduced in the Senate. This bill would require manufacturers to report dairy processing costs every two years, which would help dairy farmers make sure that their prices accurately reflect the costs of production. Companion legislation (H.R.295) had already been introduced in the House of Representatives. As of press deadline, this specific legislation remained in respective committees.
Meanwhile, the One Big Beautiful Bill passed in July included the authorization and funds for the USDA to conduct mandatory processing plant cost surveys every two years and report the results.
2. DMC policy change
Since 2019, the Dairy Margin Coverage (DMC) program has served as a voluntary risk management program that offers protection when the difference between milk prices and feed costs falls below a selected margin.
While some years the margins are beneficial for dairy producers and the program is seldom used, as was the case for 2024 and so far in 2025, in other years, the program is critical for a farm business. In 2023, for example, DMC paid out more than $1.2 billion in payments to 17,130 enrolled operations as margins consistently fell below coverage levels throughout the year.
The One Big Beautiful Bill Act signed into law in July included several changes to the DMC program. The changes included extending the program through 2031; updating production history to the highest production of 2021, 2022 and 2023; and extending the 25% premium discount for locking in coverage for the duration of the bill. These changes were viewed as drastic improvements to DMC’s existing policies.
3. Heifer, cull cow prices and supply
Tight cattle supplies and record-high prices for beef calves prompted many dairy farmers to produce more calves destined for beef feedlots and fewer to milk barns.
The shortage of replacement dairy heifers has sent values soaring. A 20-year low in replacement heifers had the quarterly average prices as reported by USDA reach $3,010 per head in July, the highest level on record. That number was up $140 (5%) from April 2025 and up $650 (22%) from July 2024.
Dairy producers are making changes in semen purchases to create more heifer calves, but replenishing the pipeline of heifers available to enter the milking herd is looking to be a three-plus-year proposition.
Meanwhile, producers are culling fewer cows to keep the milk flowing.
Weekly slaughter in 2025 continues to follow long-term trends. Since September 2023 and through the week ending Sept. 13, weekly dairy cow slaughter trailed year-earlier levels for 98 of 106 weeks, with a total decline of nearly 556,100 head over that period.
Based on the monthly data, year-to-date (January-August) dairy cull cow slaughter now stands at about 1,718,600 head, down 126,200 from the same period a year ago and the lowest eight-month total to start the year since 2008.
This has prompted record-high prices for cull cows. The 2025 average cull cow prices (beef and dairy, combined) in July 2025 averaged $157 per hundredweight (cwt), up $36 from December and up $15 per cwt from July 2024. It is also up $15 from peaks in July and August last year, setting a new all-time high for cull cow prices.
The declining heifer inventories could limit growth in the milk supply, a looming concern for dairy processors with expansion plans underway.
4. Processing expansion
There is a processing boom happening in the U.S. right now with dairy processors investing more than $11 billion in new and expanded manufacturing capacity.
Here are some of the projects Progressive Dairy noted throughout the year.
- Chobani announced plans for a $500 million expansion of its processing plant in Twin Falls, Idaho, where yogurt, oat milk and coffee creamers are produced. The company also broke ground on a new $1.2 billion dairy processing plant in Rome, New York.
- Hilmar Cheese Company Inc. held a ribbon cutting ceremony at its $600 million Dodge City, Kansas, facility which makes American-style cheese in commercial 40-pound blocks.
- California Dairies Inc. (CDI) celebrated the grand opening of its new manufacturing plant, Valley Natural Beverages (VNB) in Bakersfield, California.
- Darigold Inc. began receiving and processing milk at its new facility in Pasco, Washington.
- Nebraska celebrated the groundbreaking of its first major fluid milk plant in over 60 years. DARI Processing LLC plans to construct a 236,000-square-foot milk processing plant in Seward, Nebraska.
- Cayuga Milk Ingredients (CMI) held a grand opening of its expanded facility in Auburn, Cayuga County, as part of a two-phase, multimillion-dollar expansion and investment in New York state.
- Danone U.S. announced the expansion of its Minster, Ohio, yogurt facility.
- Saputo Cheese USA Inc. officially opened its new 311,000-square-foot cold storage distribution facility in Caledonia, Wisconsin.
However, with new manufacturing coming online, some older facilities are expected to shutter. Two closures this year were the Saputo Cheese USA manufacturing plant in Suamico, Wisconsin, and the Upstate Niagara Cooperative (UNC Dairy) manufacturing facility in Rochester, New York.
5. Trade initiatives
A banner year for dairy exports last year buoyed initiatives through 2025 despite tariff threats.
Total U.S. dairy exports reached $8.2 billion in 2024. Not only was the value up 2% ($202 million) from 2023, but it marked 2024 as a record year for U.S. dairy exports. Only once before have exports surpassed this level, and that was in 2022 with year-to-date U.S. dairy exports totaling $9.7 billion.
At the start of the year, Michael Dykes, president and CEO of the International Dairy Foods Association (IDFA) said, “The U.S. dairy industry is ready to capitalize on a renewed trade agenda in 2025. Consumers … around the world continue to demand more U.S. dairy because we provide an assortment of delicious, nutritious and affordable dairy products.”
Throughout 2025, collaborations with other countries brought about several trade frameworks to support enhanced dairy trade.
The National Milk Producers Federation (NMPF) and U.S. Dairy Export Council (USDEC) announced agreements throughout the year with Indonesia, Taiwan, Malaysia, Cambodia, Thailand, Vietnam, Argentina, Ecuador, El Salvador and Guatemala.
In another agreement, the USDA and Costa Rica’s National Animal Health Service (SENASA) agreed to put in place a streamlined procedure for registering U.S. dairy facilities to export to Costa Rica.
As these agreements add diversity to the U.S. export market, over half (51%) of all U.S. dairy exports are sent to only three countries: Mexico, Canada and China. These three countries were at the center of trade tensions this year. The trade tensions with China dampened low-protein whey exports in the first half of the year, but the Trump administration was able to reach a trade deal with China in November. Meanwhile, the United States-Mexico-Canada Agreement (USMCA) is up for its six-year joint review in 2026, and dairy will be discussed.
6. Farm bill extensions
While lawmakers are playing a game of kick the can with writing a new farm bill, they were able keep the 2018 Farm Bill in place with extensions and a few modifications.
In 2024, both the Senate and House of Representatives released new versions of the farm bill, but neither made it to the Senate or House floor.
Last December as Congress passed a continuing resolution to temporarily extend federal funding, it passed a one-year farm bill extension, $10 billion in economic assistance to farmers and $100 billion in disaster aid (with about $20 billion of that going to farmers affected by recent natural disasters).
Then in July, the One Big Beautiful Bill Act included key agricultural provisions typically included in the farm bill. As mentioned, it renewed and updated the DMC program, and provided funding for mandatory dairy processing cost surveys. It also increased funding for conservation programs and animal health programs, and provided new trade promotion funding.
In addition, the bill made the Section 199A tax deduction permanent, which allows dairy farmer-owned cooperatives to reinvest the funds in their cooperatives or pass the deduction along to their farmer owners.
American Farm Bureau Federation Economist Danny Munch said the bill provided much-needed stability in federal milk pricing policy, even if the next five-year farm bill is delayed, though it stops short of removing the threat of the “dairy cliff.”
“While the bill locks in critical dairy programs through 2031, it does not extend the suspension of permanent law that could trigger outdated parity pricing mandates from the 1940s. That issue will still need to be addressed by the end of this year to prevent a reversion to outdated parity pricing rules starting in 2026,” Munch said in July.
The suspension of permanent law came at the end of the year as Congress passed a one-year extension to the 2018 Farm Bill for programs not included in the One Big Beautiful Bill. The farm bill extension until Sept. 30 was part of the continuing resolution that ended the record-setting 43-day government shutdown.
Discussions for a new, long-term farm bill are expected to continue in 2026.
7. Interest rates lower
Declining interest rates resulted in the weakest first half of a year since 2023 when rates were as low as 7.14%. The second-quarter lending rates were as low as the fourth quarter of 2022.
Lenders across the Chicago, Dallas and Kansas City Federal Reserve districts expressed reason for the decline in agricultural interest rates as they help paint the broader picture of credit conditions across the regions. Excessive moisture and deteriorating crop commodity markets weighed heavily on producer financials, while livestock producers seemed to be faring better.
On the plus side, for the first time since 2022, availability of funds increased in the second quarter of 2025 even as demand declined.
On Sept. 17, the Federal Open Market Committee made its first rate cut in nine months, lowering the federal funds rate by one-quarter point to a target range between 4% and 4.25%.
In announcing its decision, the committee cited moderate economic activity growth in the first half of the year, slower job gains and a slightly increased, but still low, unemployment rate. Inflation remained somewhat elevated.
8. HPAI update
Launched Dec. 6, 2024, the National Milk Testing Strategy (NMTS) was enacted across the country with 46 states now enrolled and performing surveillance of highly pathogenic avian influenza (HPAI) H5N1 through raw (unpasteurized) milk samples.
Ongoing testing and surveillance activities demonstrate the absence of HPAI in dairy cattle in 33 states.
While dairy cattle in a total of 17 states have been infected since the start of the outbreak in March 2024, APHIS has seen cases in only a handful states this year.
Two states experienced their first positive case of HPAI in dairy cattle in 2025. A case was identified in Nevada in March and in Nebraska in September.
In addition, the USDA Animal and Plant Health Inspection Service (APHIS) National Veterinary Services Laboratories (NVSL) confirmed cases of HPAI found in a dairy cow in late January in Nevada to be a new virus genotype (D1.1) of HPAI. This was the first case of genotype D1.1 in dairy as previous detections had been genotype B3.13.
The risk to the general public remains low, and there is no concern that HPAI poses a risk to the safety of the commercial milk supply.
Biosecurity is still key to mitigate the risk of disease introduction or spread between premises.
9. NWS threat returns
In May, the USDA suspended imports of live cattle, horses and bison from Mexico through southern border ports due to the resurgence of the New World screwworm (NWS). Screwworm is a parasitic fly that poses a significant threat to livestock and wildlife.
NWS had been detected as far north as Oaxaca and Veracruz, Mexico, approximately 700 miles from the U.S. border. The pest, known for causing myiasis by infesting living tissue, was previously eradicated from the U.S. in the 1980s after 30 years and extensive efforts.
A phased re-opening of ports was planned for July but ended two days later when a new case of NWS was reported approximately 160 miles northward of the current sterile fly dispersal grid, on the eastern side of the country and 370 miles south of the U.S./Mexico border.
Then, in September, another case of NWS was confirmed in Sabinas Hidalgo, located in the state of Nuevo León, less than 70 miles from the U.S.-Mexico border. Preliminary reports indicated the affected animal had recently been moved to a certified feedlot in Nuevo León from a region in southern Mexico with known active NWS cases.
Protecting the U.S. from NWS became a top priority and the USDA enacted a five-pronged plan in June. As part of the plan, the USDA and Mexico have been actively monitoring nearly 8,000 traps across Texas, Arizona and New Mexico. Since July, more than 13,000 screening samples have been submitted, with no NWS flies detected.
In addition, Mexico has begun renovations of its sterile fruit fly facility in Metapa, where the USDA invested $21 million toward the project. In the U.S., the USDA launched an $8.5 million sterile NWS fly dispersal facility in south Texas.
10. Whole milk tries again
In the previous Congress, the Whole Milk for Healthy Kids Act received overwhelmingly bipartisan support with 134 co-sponsors. It was passed by the House of Representatives 330-99 in December 2023, but the Senate did not take up the legislation before the 118th Congress adjourned.
Trying again, the The Whole Milk for Healthy Kids Act of 2025 (H.R.649), which would provide schools the opportunity to serve nutritious whole and 2% milk, was introduced and referred to the House Committee on Education and Workforce. It was approved with a strong, bipartisan vote of 24-10 in February. The Senate ag committee passed its version (S.222) in June.
Later in the year, the Make America Healthy Again (MAHA) Commission released its Make Our Children Healthy Again Strategy, which included restoring whole milk in schools.
On Nov. 20, the U.S. Senate approved the Whole Milk for Healthy Kids Act of 2025 (S.222) by unanimous consent. The bill then moved to the House of Representatives for consideration, and if approved, would head to the President to become law. At press deadline, this was expected to occur just after Thanksgiving.
