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.
Fettuccini alfredo Monday
South America, Karlin said, has stepped up its production of both corn and soybeans at the same time that China has increased its consumption of both.
Demand for U.S. corn is on the decline, he said, as exports drop and prices rise due to low stocks. He believes ethanol production has topped out based on economics and is close to mandated levels.
All three of the top soybean producers — the United States, Argentina and Brazil — were also “whacked” by drought conditions, Karlin said.
On the bearish side, Karlin said, it’s expected that U.S. soybean plantings will reach record levels and the U.S. could be looking at its highest corn acreage since 1936.
Karlin said other “animal groups” have responded to record high prices in a “rational fashion; they’ve reduced production. For beef, poultry and pork the trend is down. Milk has been up and steady every single year. What do dairy producers see that other people don’t?”
A chart that Karlin flashed on U.S. per capita fluid milk and cream consumption is striking. It shows a dramatic drop over the years from 1975 to 2011. But cheese consumption is rising, while butter consumption is flat.
Karlin said retail prices for pork, beef and poultry are reaching new highs, but milk prices are not rising.
California’s dairy producers have been especially hurt by higher feed costs because a lot of what they feed their animals is procured “off farm,” Karlin said. It’s imported from out of state or even out of country.
Increased air and water regulations, along with difficulties in finding qualified labor, have further challenged the dairy industry in California.
Karlin said milk prices are already being forecast at record highs, but that’s partially predicated on expected declines in producing countries, something that may or may not happen.
A better economy could foster more demand in the restaurant sector and elsewhere, he said.
Tongue firmly in cheek, Karlin proposed a solution to the dairy crisis: “Instead of meatless Monday — Fettuccini Alfredo Monday — cardiologists be damned.”