Challenges Facing Dairy Producers Now and in Future

Challenges Facing Dairy Producers Now and in Future

I’m KayDee Gilkey with today’s Northwest Farm and Ranch Report.

A Senior USDA Ag Economist says dairy producers could see some relief from the cost-price squeeze toward the end of 2013 - if there’s better weather, bigger corn and soybean crops and lower prices for those crops. Economist Jerry Cessna says feed prices will be high for most of this year.

Cessna: “We’re going to have declining cow numbers. Daily milk production is expected to grow by .6 percent in 2013. So not as high as we’ve seen in the last couple of years.”

Cessna says the all milk price will average four-percent higher than 2012 - but the cost-price squeeze will show up in net cash incomes for dairy operations - a decrease of 14.5-percent from last year.

He says the U.S. dairy herd will continue to shrink by almost two-percent a year. However - milk per cow is expected to rise by one-point-six-percent per year after this year. Barring any huge crisis - Cessna expects the all milk price to increase on average by seven-tenths of one-percent each year through 2022.

Cessna: “Getting up to $20.80. You may look at that and think, ‘That sounds like kind of a bullish forecast; but if you take inflation into account we actually have a decrease in the all milk price by 1.6 percent.”

In order to keep up with those rising input costs - Cessna says dairy producers will have to become more efficient.