Managing Through Low Milk Prices: Key Focus Areas for Dairy Producers in 2026

Where dairy producers can tighten operations and protect cash flow in the year ahead

As milk prices tighten heading into 2026, consultant Pauly Paul outlines where dairies are finding opportunity to improve cash flow through labor, reproduction and feeding efficiency.

Labor Efficiency Is the First Area to Evaluate

Pauly Paul said many dairies are entering 2026 overstaffed, often without realizing it. As part of on-farm audits, he looks at labor allocation across departments to identify opportunities to reorganize work rather than add employees.

“I’ve been working with a lot of dairies that are being proactive,” Paul said. “They know the low milk prices are coming, so they’re putting together 2026 budgets and realizing they are not able to cash flow.”

In several cases, reorganizing pens and workflows allowed farms to reduce labor hours significantly. On one dairy, restructuring eliminated the need to replace a key employee, immediately saving about $70,000 annually.

Reorganizing Cow Flow Can Reduce Labor Costs

Paul shared examples where simple changes led to major savings. Separating open cows from pregnant cows reduced the amount of pen walking required for breeding and treatments, cutting daily labor demands in half on some farms.

“If you can shave off a quarter million dollars worth of labor by doing something like that, that’s a big deal,” Paul said.

He also noted that parlor staffing often presents opportunity. In some rotary parlors, excess labor was standing idle, creating immediate cost savings when staffing levels were adjusted.

Reproduction Performance Directly Impacts Income

Paul emphasized that reproduction remains a major lever for profitability, especially with high calf values. He said he continues to see large variation in pregnancy rates across dairies, ranging from the teens to around 40 percent.

“With the value of every calf that hits the ground, a 40 preg rate is really what you want,” Paul said.

Common issues he finds include improper semen placement, timing errors with synchronization protocols and lack of physical heat detection. Correcting those issues has doubled conception rates on some farms.

Feeding and Ration Review Often Reveal Hidden Costs

On the feeding side, Paul said empty bunks remain a frequent issue, particularly on heavily overstocked dairies. He stressed that feed must be available at all times to support intake and production.

Ration reviews also reveal opportunities. Paul often finds extra ingredients that were added temporarily but never removed, increasing feed costs unnecessarily. He also noted that what is on paper does not always match what cows receive at the bunk.

Budgeting, Debt and Cash Planning Cannot Wait

Beyond daily operations, Paul urged producers to focus on budgeting and debt structure ahead of spring. He cautioned that lines of credit are a common pressure point and should be reviewed before planting season. His advice centers on being proactive, addressing expenses early and avoiding high-interest borrowing when cash flow tightens.

Paul’s guidance highlights that managing through low milk prices in 2026 will depend less on quick fixes and more on disciplined planning, operational efficiency and cash-focused decision making.

For more insight from this conversation with Pauly Paul, listen on Apple Podcasts or Spotify, or watch the full discussion below.