Dairy Economics Perspective From NMPF

With the announcement of the new Secretary of Agriculture, Brooke Rollins, the National Milk Producers Federation reflects on the strong prices and production that dairy industry has experienced this year. Chris Galen, senior vice president of member services and strategic initiatives with the National Milk Producers Federation.

“Back then again, the Great Recession, and we saw just awful prices, and we were really pleading with the new secretary to do something about it. Different dynamic this year, we have much stronger prices. Cheese prices have come off a bit from their highs of this summer, but margins are still very healthy. You know, corn and soybean prices, we've had a good harvest in the Corn Belt, so that means that input costs are moderate. So it's been a good year for dairy farmers. And I think the big question is, how long

will that last?”

Galen shares his perspective on the answer to that question.

“Good news is that it doesn't look like production is going to ramp up in response to these higher prices and better margins. That's always been the roller coaster that we've been on in dairy and frankly, in all of agriculture, where low prices cure low prices, but the same is true of high prices, where high prices will bring on more production, which will tilt the supply-demand balance the other direction and prices go back down more with.”

Galen coming up on Monday's Line on Ag Report.