Is the word "dairy" in "dairy farmer" being used as a noun or adjective?

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A "dairy farmer" in this context is a farmer who produces dairy products, especially milk (and especially from cows). This is true regardless of how you label the parts of speech.

Whether you want to call "dairy" an adjective or an attributive noun depends on your dictionary. Merriam-Webster lists it as a "noun, often attributive" and defines it as:

2a : the department of farming or of a farm that is concerned with the production of milk, butter, and cheese
b : a farm devoted to such production
4 : milk from a cow or other domestic animal (such as a goat)
also : food (such as ice cream, cheese, or yogurt) made primarily of or from milk

It lists an adjective as well, but just gives "dairy products" as an example and provides no separate definition.

On the other hand, the OED lists this specific usage as an adjective:

1.1 Concerned with the production of milk.
'a dairy farmer'

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