I'm married to a dairy farmer, so feel qualified to comment on this thread...
The milk industry is actually very brutal.
To produce milk, dairy cows need to have a calf. In the majority of cases the calf is usually removed within 24 hours of birth so the mother can be milked for milk. The separated calf (usually kept in separate housing to the cows) is either then fed milk powder replacement twice/three times a day or given milk that is taken from the cows specifically for the calves when they are milked (my DH took it out of the milk tank after milking).
Most farmers keep the female calves (heifers) to grow on as replacement stock. Many farmers kill bull calves at birth. I categorically know of 2 dairy farms within a 5 mile radius of our farm, including the biggest in our area which has 600 cows, where the hunt goes once a week and kills the bull calves born that week. They are then fed to the hounds or incinerated. This is because the average price for an unweaned dairy bull calf at a market can be as little as £10. Sometimes they can't even be sold. When you factor in transport costs to market and the costs of registering the calves, they can end up costing the farmer money to send them to a sale.
Other farmers find killing calves at birth morally reprehensible (my DH included) and so keep the bull calves and grow them on as dairy beef. They grow on to about 18 months - 2 years and then are sent for slaughter. They end up as the cheaper cuts of meat, used for beef burgers, petfood, you get the idea.
The milk industry is driven solely by economics. The supermarket (Tescos etc) will charge its customer roughly 80p for a litre of milk and they often use the milk as a loss leader to get more customers.
Farmers on the very best milk production contracts get 28p litre. I think Tescos has just started giving its suppliers 28.5p a litre. That's for FULL milk straight out of the cow, so the semi-skimmed milk you buy in the supermarket has had the butterfat and cream removed (and is sold separately). The majority of farmers get between 22p and 24p a litre. To PRODUCE a litre of milk, it costs roughly 27p a litre. (Mostly due to the hike in feed and fuel costs), so to produce milk huge numbers of farmers either only break even (because of being able to do economies of scale) or they loose money.
Consequently, bull dairy calves are not cost effective because they have to be fed and it costs money to do so. It's cheaper to kill them at birth and more economically driven farmers than my DH make the decision on a pure cash basis.
During the months Novemeber - December 2010, 53 dairy farmers went out of the dairy business. (Statistics from Farmers Weekly 6th Jan 2011). We were one of them. People have NO IDEA about the dairy industry.