What is in this article?:
- The likelihood of another perfect storm challenge to the dairy industry from Mother Nature – particularly in the drought arena – is unlikely to be repeated. But at the same time, recovery for a troubled industry, shredded by the drought and high costs for feed, isn’t likely to come any time soon.
An analyst on milk pricing and feed costs delivered a rapid-fire look in a Tulare seminar on the challenge facing the dairy industry — especially in California — and pondered whether the perfect storm that has driven feed costs through the roof can repeat itself this year.
His arguable conclusion: The likelihood of another such challenge from Mother Nature – particularly in the drought arena – is unlikely to be repeated. But at the same time, recovery for a troubled industry, shredded by the drought and high costs for feed, isn’t likely to come any time soon.
Those were the observations from Joel Karlin, market analyst for Western Milling in Goshen, who produces a weekly newsletter on feed and dairy markets.
“With Western Milling, I trade; I sell feed to dairies; and I do research and have had a front row seat to the turmoil that has affected dairies the past few years – taking a financial, emotional and personal toll — an industry turning upside down.”
Karlin said troubling signs for the dairy industry include the fact that in the United States per capita consumption of milk is declining.
“Consumption of fluid milk is falling,” Karlin said.
Karlin’s observations came during a seminar he presented at the World Ag Expo on the milk price outlook, looking at the drought and how it continues to impact the price of feed and milk.
Karlin said California milk producers are faring worse than their cousins elsewhere because they have milk prices in that state that are below average, especially for cheese and whey milk, and they face higher feed costs.
“California dairies have the lowest milk prices in the country and the highest feed costs, a very unenviable combination,” Karlin said, adding that milk production is still too high for “level demand that at best has tapered off.”
He said there is some positive news on the export front, showing increased demand and positive signs from new products like Greek yogurt.
Also positive is that the U.S. Department of Agriculture is forecasting a drop in U.S. milk production, something that hasn’t happened since 2001. Other key milk producing regions worldwide are showing signs of decreased production.
On the down side, Karlin said, efforts to cull the nation’s dairy herd may have fallen short because cow numbers remain high because of the addition of replacement heifers that result in a younger, more productive, more healthy herd.