Tight Margins Slow Milk Production

U.S. dairy farmers have taken 43,000 cows out of the national herd since February, reining in milk production growth in a fourth year of sour milk prices.

There is “certainly economic hardship at the farm level throughout the country,” Matt Gould, analyst with Dairy Market Analyst, said.

Producers he’s visited with in different parts of the country feel “downtrodden and beat up” after several years of lackluster prices, he said.

“Some of these farms have struggled to be profitable” since 2014, which was a great year for milk prices, he said.

Farms have gone out of business in the East due to economic conditions. Further west, they’re going out in Ohio, Wisconsin and Minnesota because operators can’t make ends meet. A number are in the process of selling out in Idaho, and the same is rumored in California. Some have already gone out of business in New Mexico, he said.

Things were setting up to be not so disappointing in 2018. But the tariff wars started in June and took a lot of money out of the dairy farm economy, with estimated losses of $1.5 billion this year, he said.

Milk production has slowed bust managed to increase 0.8 percent in October year over year to 17.9 billion pounds, USDA National Agricultural Statistics Service reported on Monday.

There were 30,000 fewer head on U.S. dairies compared with October 2017, but ever-improving production per cow tilted the scale.

Twelve of the 23 reporting states — including Wisconsin, the second largest milk-producing state — saw declines in milk production year over year. But heavy hitters California, Idaho and New York were up 3.2 percent, 2.1 percent and 1 percent, respectively.

California dairy producers reduced cow numbers by 30,000 year over year but gained 70 pounds in production per cow. Idaho farmers increased cow numbers by 7,000 and picked up 20 pounds per cow. New York saw 3,000 fewer cows but gained 30 pounds per cow.

Wisconsin held steady on per-cow production but reduced cow numbers by 4,000.

Six of the 23 states increased cow numbers, and 14 reported an increase in production per cow year over year.

Production in Texas, the fifth largest milking state, was up 7.5 percent on an additional 24,000 head and an increase of 50 pounds per cow. The state has been pushing the gas pedal all year after increasing milk production nearly 12 percent in 2017.

Part of the growth is Texas is due to new processing capacity, Gould said.

Expansions take several years to plan and were already in the pipeline in Texas, and producers don’t pencil out building on one year’s worth of economics, he said.

Source: Carol Ryan Dumas, Capital Press

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