> I regularly order locally-produced milk from very small scale farmers
Not a specialist here, but I think I'm generally well informed and just trying to use some common sense. You probably pay a bit more for that milk than at the supermarket, right?
Most people in your country don't do what you do, they buy it at the supermarket. The dairy products at the supermarket simply don't come from those farms.
Do you think it would be possible for everyone in your city to consume milk that way?
Would there be enough farms to produce enough dairy that way at a reasonable price that most people would be ready to pay? I'm going to guess that probably not that would not be sustainable.
Still, in the end, the economic incentives for that farmer to produce more milk are the same. The farmer would be incentivized to use better milk yielding cows, get rid of the males, feed the cheapest possible food to the animals.