Government Shutdown Could Lead to Dairy Industry Volatility

The government shutdown has created a domino effect to challenges across the agriculture industry, and dairy is no exception. Chris Galen, senior vice president of member services and strategic initiatives with the National Milk Producers Federation, explains how the lack of federal dairy reports is impacting market transparency and overall dairy economics.

“Prices have been really decent this year, but certain commodities, like butter have really dropped. Cheese has dropped to an extent, not the same degree, as butter. So we're looking at some headwinds here, and part of it is the tariff situation, particularly when it comes to China and our exports there. Part of is just the economy, and a lot of it is actually production. One of the reasons why butter has dropped as much as it has is that the amount of butter fat coming out of our cows has just grown by leaps and bounds in the past decade.”

Galen says dairy producers have boosted protein and milk fat output, creating a surplus of cream and driving butter prices down. But with a government shutdown halting key reports, he warns the lack of data could lead to more market volatility,

“Whereas if this goes on for weeks and we don't have USDA data to look at, then the marketplace is going to be even more volatile, because there won't be any good information out there about supply and demand.”

Chris Galen with the National Milk Producers Federation.