NAICS 112120 Quarterly Industry Report
Dairy Cattle and Milk Production
Comprehensive industry research for valuation professionals, business owners, buyers, and lenders
NAICS Code: 112120Sector: Agriculture, Forestry, Fishing and Hunting (11)Updated: Q1 2026
About This Report
This Fair Market Value industry report (NAICS 112120) provides valuation-focused intelligence for professionals assessing dairy cattle and milk production businesses. Additional data is drawn from Bureau of Labor Statistics[6], U.S. Census Bureau[7].. Data is compiled from USDA NASS milk production reports[8], USDA ERS dairy market analysis[4], and SBA size standards[9] to support business appraisals, acquisition due diligence, lending decisions, and succession planning for dairy enterprises.
Industry Definition & Overview
Dairy Cattle and Milk Production (NAICS 112120) encompasses establishments primarily engaged in milking dairy cattle and producing raw fluid milk for sale to processors and cooperatives. USDA National Agricultural Statistics Service[3] data indicate the United States dairy herd included roughly 9.4 million milk cows as of 2024, producing over 226 billion pounds of milk annually. Over recent decades, the industry has undergone dramatic structural consolidation, with the number of licensed dairy operations declining steadily while average herd sizes have grown, reflecting economies of scale that favor larger, more capital-intensive facilities.
During 2024 alone, the U.S. dairy sector lost roughly 6% of its dairy farms, continuing a long-term consolidation trend documented by the USDA Economic Research Service[4]. California, Wisconsin, Idaho, New York, and Texas rank as the top five milk-producing states, collectively generating over 65% of national milk output. Most dairy operations are family-owned businesses that market milk through producer cooperatives, which negotiate pricing and handle distribution to fluid milk processors, cheese plants, butter manufacturers, and other dairy product facilities. Federal and state milk marketing orders administered through the USDA Agricultural Marketing Service[5] establish minimum pricing formulas that influence farm-level revenue.
Business valuations for dairy operations require careful assessment of milking herd size and genetics, facility capacity and modernization level, milk production per cow, quota or base holdings where applicable, feed sourcing arrangements, and environmental compliance status. Modern dairy facilities demand heavy capital investment in milking parlors or robotic systems, manure management infrastructure, and feed storage, making replacement cost analysis a critical component of dairy enterprise appraisals.
What's Included in This Industry
- Sector-specific valuation multiples and financial benchmarks for dairy cattle and milk production operations
- Revenue and profitability trend analysis across conventional and organic dairy business models
- SBA size standard classification and lending threshold data for NAICS 112120
- Comparable transaction data from recent dairy farm sales, acquisitions, and herd dispersals
- Regional market analysis covering major milk-producing states and milk marketing order areas
- Workforce and labor cost benchmarking for dairy managers, herdsmen, and milking parlor employees
- Industry risk assessment including milk price volatility, feed costs, and environmental regulatory factors
- Federal milk marketing order overview and pricing mechanism analysis affecting farm revenue
- Capital expenditure profiles for milking systems, housing facilities, and manure management infrastructure
- Production efficiency metrics including milk yield per cow, somatic cell counts, and reproductive performance
NAICS Classification Hierarchy
| Level | Description | Code |
|---|---|---|
| Sector | Agriculture, Forestry, Fishing and Hunting | 11 |
| Subsector | Animal Production and Aquaculture | 112 |
| Industry Group | Cattle Ranching and Farming | 1121 |
| NAICS Industry | Dairy Cattle and Milk Production | 11212 |
| National Industry | Dairy Cattle and Milk Production | 112120 |
Related NAICS Codes
| Code | Description | Relationship |
|---|---|---|
| 112111 | Beef Cattle Ranching and Farming | Beef cattle ranching operations that receive cull dairy cows and surplus dairy calves for beef production and feeding purposes |
| 311511 | Fluid Milk Manufacturing | Fluid milk manufacturing plants that pasteurize, homogenize, and package raw milk purchased directly from dairy farm operations |
| 311513 | Cheese Manufacturing | Cheese manufacturing establishments that process raw milk into natural and processed cheese products for wholesale and retail distribution |
| 311514 | Dry, Condensed, and Evaporated Dairy Product Manufacturing | Dry, condensed, and evaporated dairy product manufacturers converting raw milk into shelf-stable dairy ingredients and powders |
| 311512 | Creamery Butter Manufacturing | Creamery butter manufacturing operations that churn cream separated from whole milk into butter products for consumer markets |
| 424430 | Dairy Product (except Dried or Canned) Merchant Wholesalers | Dairy product merchant wholesalers and producer cooperatives that aggregate and market raw milk from farm operations to processing facilities |
SBA Lending Summary
64
Total SBA Loans
$5.7M
Total Loan Volume
$90K
Average Loan Size
9 yrs
Average Loan Term
11.04%
Average Interest Rate
144
Jobs Supported
Source: SBA 7(a) Program Data, U.S. Small Business Administration — FY 2025[2]
Key Insight: The SBA[10] classifies Dairy Cattle and Milk Production (NAICS 112120) with a size standard of $3.75 million in average annual receipts. Dairy operations at or below this revenue threshold qualify as small businesses for SBA-backed lending[11], government contracting preferences, and USDA dairy support programs. Given the trend toward larger operations, an increasing share of U.S. milk production comes from farms exceeding this threshold, though smaller family dairies remain numerous across traditional dairy regions. Eligible businesses can access SBA 7(a) loans[12] for working capital, equipment, and acquisition financing, while 504 loans[13] support major fixed-asset purchases including real estate and heavy machinery.
Top SBA Lenders
| # | Lender | Loans | Volume | Avg Loan |
|---|---|---|---|---|
| 1 | Readycap Lending, LLC | 16 | $3.2M | $200K |
| 2 | Celtic Bank Corporation | 8 | $1.2M | $150K |
| 3 | The Huntington National Bank | 16 | $1.0M | $63K |
| 4 | Five Star Bank | 16 | $203K | $13K |
| 5 | Wells Fargo Bank National Association | 8 | $120K | $15K |
Frequently Asked Questions
Common questions about this industry.
What is the NAICS code for dairy farming?
Dairy Cattle and Milk Production is classified under NAICS code 112120, covering establishments primarily engaged in milking dairy cattle and selling raw fluid milk to cooperatives, processors, and other buyers.
What is the SBA size standard for dairy operations?
The SBA[10] sets the size standard for NAICS 112120 at $3.75 million in average annual receipts, qualifying eligible dairy operations for small business lending programs and government contracting preferences.
How many dairy farms are in the United States?
U.S. dairy farm numbers continue to decline through consolidation, with the USDA NASS[3] reporting steady annual decreases. The nation lost roughly 6% of its dairy operations during 2024, though total milk production remained stable due to increasing herd sizes and per-cow productivity gains.
What factors drive dairy farm valuations?
Key valuation drivers include milking herd size and genetic quality, facility capacity and condition, milk production per cow averages, cooperative membership and milk marketing arrangements, land and feed sourcing assets, and environmental compliance status as regulated through EPA CAFO standards[14].
Which states lead in milk production?
California, Wisconsin, Idaho, New York, and Texas rank as the top five milk-producing states per USDA NASS[15] data, collectively accounting for over 65% of total U.S. milk output.
How do federal milk marketing orders affect dairy valuations?
Federal milk marketing orders, administered by the USDA AMS[5], establish minimum pricing formulas based on end-use classification of milk. These regulated pricing structures directly impact farm revenue projections and must be incorporated into dairy business valuations.
What is the trend in dairy farm consolidation?
The U.S. dairy industry has experienced decades of consolidation, with fewer but larger operations accounting for a growing share of production. USDA ERS[4] reports show that farms with 2,000 or more cows now produce the majority of U.S. milk, while small and mid-size dairies continue to exit.
What capital investments are critical for dairy operation valuations?
Major capital items include milking parlors or robotic milking systems, free-stall housing barns, feed storage and mixing facilities, manure management systems, cooling and milk storage tanks, and reproductive technology equipment. Replacement cost and remaining useful life of these assets are central to dairy appraisals.
Sources & References
Government datasets and editorial sources used in this report.
- [1]U.S. Bureau of Labor Statistics, Quarterly Census of Employment and Wages bls.gov
- [2]U.S. Small Business Administration, SBA 7(a) Loan Program Data data.sba.gov
- [3]USDA National Agricultural Statistics Service nass.usda.gov
- [4]USDA Economic Research Service ers.usda.gov
- [5]USDA Agricultural Marketing Service ams.usda.gov
- [6]Bureau of Labor Statistics bls.gov
- [7]U.S. Census Bureau census.gov
- [8]USDA NASS milk production reports nass.usda.gov
- [9]SBA size standards sba.gov
- [10]SBA sba.gov
- [11]SBA-backed lending sba.gov
- [12]SBA 7(a) loans sba.gov
- [13]504 loans sba.gov
- [14]EPA CAFO standards epa.gov
- [15]USDA NASS nass.usda.gov
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