going into butter production, resulting in heavy inventories and lower than expected
prices this year.
The Farm Bill is at the forefront for dairy producers at the moment. Both sides of Congress have
passed large changes to the Dairy Section of the Farm Bill which will replace the current Dairy
Price Support Program and Milk Income Loss Contract program with a margin insurance program.
The Senate version has passed the Dairy Security Act that contains a market stabilization section
that forces participating dairy producers to reduce milk production during times of low margins.
The House of Representatives has passed the Dairy Freedom Act that does not contain any provisions that would reduce milk production. Secondarily, there is the price of feed inputs, which has
had a large impact dairy producer profitability over the past few years. Feed costs will be impacted, not only by the Farm Bill, but also potential changes in energy policy. Weather conditions in
the U.S., South America, New Zealand and Australia require constant monitoring with regards to
impacts on feed inputs and competing milk supplies that also service the international markets.
What do you see in store for the dairy industry in the next few years?
The industry will continue to grow, but the number of dairy producers in the U.S. will continue
to decline. It is not a given that the number of processors will also decline as more and more
smaller companies are starting to process milk to take advantage of the current local, know-your-food trend that probably will continue for a few more years. There will continue to be
opportunities in the export market as more and more consumers climb up the economic ladder and naturally move over to a more
animal-based diet. The opportunities will be difficult to acquire as other exporting countries are ramping up their production sectors
to take advantage of the expect growth. Importing countries are also working to supply more of their own needs. Given the relatively
stable production levels in the U.S., the U.S. dairy industry should continue to have a place at the table to fill international needs. But
the continued evolution of the U.S. dairy industry will need to be looked upon as a reliable supplier of the dairy products in demand
by international customers. ◆
The industry will continue
to grow, but the number of
dairy producers in the U.S.
will continue to decline.
It is not a given that the
number of processors will
also decline as more and
more smaller companies are
starting to process milk to
take advantage of the cur-
rent local, know-your-food
trend that will probably con-
tinue for a few more years.
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Hang up your gloves.