Why Are Dairy Farms Located Near Urban Areas (Important factors to consider)

By Dairy Farming Hut

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Modern commercial dairy farms are positioned near urban areas for many reasons, although these reasons differ slightly from those formulated in the past.

Even though pasteurization has facilitated milk commercialization to distant markets, modern dairy farms located near cities or places with a bustling urban economy can benefit from significant advantages related to production and shipping costs, resulting in a discounted market price.

This scenario is a win-win for both consumers and suppliers. Another factor to weigh in is the milk-processing stage. Processing and packaging plants are traditionally located in industrial zones, under local regulations, and fresh milk needs to be produced near these plants for faster treatment in order to avoid spoilage.

Why are dairy farms located where they are?

Even before pasteurization became a thing in the 19th century, commercial farmers had to find a way to provide fresh milk to a large number of people in the shortest timeframe possible. Milk and other dairy products couldn't be successfully transported over long distances. 

This meant one of two things: either the cities had to be built around rural areas (comprising dairy farms), or dairy farmers had to establish their herd near these markets to ensure year-long profitability. Judging from history, usually the first of both scenarios was the case, as many cities grew out of rural villages.

Where are most dairy farms located?

To this day, many developed economies have a thriving agricultural industry, albeit naturally, with more modernized production methods. For example, countries like the Netherlands are traditionally known for their exceptionally large dairy industry, employing unique practices and advanced farming methods to deliver their famous quality dairy products. France and Germany are known mostly for their production capacity, but they also deliver exceptionally good milk. 

The United States currently sits as the 2nd largest milk producer in the world, with an annual output of nearly 100 million tonnes. Inside the U.S., California recently ranked 1st in milk supply, registering a production of 41.3 billion pounds of milk in 2020, while Wisconsin (known officially as "America's Dairyland") produced close to 30.7 billion, but also had the highest number of licensed dairy herds (7,110) countrywide.

In developing countries, they've built their urban areas - usually with high demand for dairy products - far from milk production areas, mostly because of rushed planning. This has resulted in delayed efforts to establish dairy industries near large cities to meet the overwhelming demand. In these particular instances, the already elevated costs ascribed to milk production in remote places are aggravated by poor road conditions, combined with high fuel prices. Adding fuel to the fire, governments in some of these countries often control the price of basic goods, forcing plants to focus on producing more profitable dairy products such as yogurt to meet their budget goals since they cannot include all the production expenses into the milk price.

Most advanced countries have had the advantage of transitioning organically from their underdeveloped stage over a large span of time, meaning that they've successfully merged all their agricultural needs with other demands suitable for completely developed societies.

Impact on Family Farms

Historically, dairy farms have played an integral role in any self-sustainable society. Back in the day, before the big rural exodus triggered by the industrial revolution in the 18th century, dairy farms were almost indistinguishable from family households, as virtually each family unit had its own source of milk. Even though at the peak of urban development, family farms are still a thing.

According to recent data, around 95% of dairy farms in the U.S. are still family-owned. However, many of them are destined for mass production nowadays. Thanks to the pasteurization mentioned above and other advanced dairy handling methods, the transition from family farming to industrial dairy farming enabled smallholding farmers to transition into commercial or industrial farmers.

However, there has been a sharp decline in the number of operative smallholding dairy farms in recent years and an increasing concentration in farming activity in big industrial farms.

Nonetheless, mass milk production has had its own share of problems, mainly with environmentalist organizations over the issue of manure concentrations and the risks associated with it. These farms use mostly Holstein-Friesian cows or Holstein crossbreed, as they have higher milk yield than most others.

Factors to consider while deciding the location of the dairy farm 

In principle, large dairy farms should be located near urban settlements, but not in the settlements themselves . Traditionally, it was not unusual to find livestock roaming around cities and towns, but the environmental conditions caused by the ever-increasing industrialization, as well as the lack of proper real estate available in these areas suited for this activity, make this idea implausible in the modern era, especially if you want to have a space dedicated to animal feed harvesting in order to cut down costs.

Moreover, fodder is usually harder to find and, when available, is far too expensive. Same with the workforce, owing to the higher cost of living in urban centers. Finally, local and national regulations often limit the capacity to own livestock, especially the size of cows, in urban zones.

On the other side, overly rural areas render easier and cheaper access to fodder and labor. Furthermore, the housing prices and the cost per square meter of land are significantly more economical when compared with prices found in urban or suburban areas.

Conversely, the demand for fresh milk in these locations is remarkably lower as well, and thus, the price further reduces. As stated before, the shipping and production costs are increased because of mileage and the amount of spoiled milk that results from slower processing.

Ideally, villages connected to large cities by highways are the perfect place to establish a dairy farm since they provide midway solutions to the problems outlined above. This also allows farmers to rely less on middlemen and involve themselves more in the marketing, diminishing costs and offering more competitive prices for their products.


- Village milk processing


- Pasteurization


- 2020 U.S dairy trade and processing


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