Throughout the nineteenth century not much commercial processing of dairy products took place in Texas, and the state imported almost all of its condensed milk and cheese from the northern dairy states. Creameries, primarily to produce butter, were established in several North Texas towns such as Greenville, Alvarado, Terrell, and Weatherford in the late 1880s. They were premature, and most of them failed. Supply and markets continued to grow, however, so that by 1900 twelve and by 1913 eighty-nine creameries were in operation in the state. Even though the amount of butter produced in Texas grew from 4,982,000 pounds in 1918 to 25,083,000 in 1930, Texas was importing at least fifteen carloads of butter monthly during most of the 1920s.
Until World War II and even afterward, many small-town, and most rural, residents continued to produce their own milk and make their own butter. Around the growing cities, however, specialized dairies were producing fluid milk in large quantities by the late 1920s, and although many continued to sell directly to the consumer, demands for pasteurization increased the need for processing and interposed a handler between producers and consumers. Between 1889 and 1929 sales of fresh milk increased from 6,527,000 to 75,148,000 gallons annually; in the latter year the state's dairy farmers produced 412,708,000 gallons. During the 1930s more processing plants were established, and by 1939 Texas had 228 dairy-product factories, including twenty-two cheese plants, nine condensed and evaporated milk plants, sixty-six creamery butter plants, and 131 plants making ice cream. Of course, most of these were also engaged in pasteurizing and bottling whole milk. Expansion of production generally continued through World War II and up to the 1950s.
The structure of dairy-product manufacturing changed rapidly in the thirty years following 1950. The number of dairy establishments declined as large commercial manufacturers took control of the industry. At the same time, the number of milk cows declined as production per cow increased. By 1967 the state had 139 dairy-product firms operating, and a decade later, except for cottage cheese and ice cream producers, so few manufacturers that Texas Dairy Statistics no longer reported total production or number of businesses. This meant that fewer than three firms were engaged in production. While Texas ranked consistently in the top fifteen states of the nation in milk production, butter production had fallen by the 1970s to less than one-fifth that of 1930, and less than 1 percent of the amount produced in the United States. Cheese production was also insignificant. But Texas remained a major producer of ice cream and up to the early 1980s led the nation in mellorine manufacture, usually turning out about half of the national product. Consequently, Texas, while it was not important in most manufactured dairy products, remained an important dairy state; in 1982 dairy products made up 5.4 percent of the value of Texas agricultural production. In 1992, 5.6 percent of farm income was from dairy products. Dairy products reported included 123,670,000 gallons of frozen dessert (56,031,000 gallons of ice cream), 20,603,000 gallons of ice milk, and 2,268 gallons of milk sherbet. Total production of milk in 1992 was 5,590,000,000 pounds. Of this 5,549,000,000 was sold to plants and dealers. The average price was $13.70 a hundred pounds. Cash receipts for milk in 1992 totaled $760,213,000.