April 20, 2018

Low Prices Continue to Shift The Dairy Landscape

 |  By: Anna-Lisa Laca

As producers continue to fight low milk prices, the nationwide dairy landscape continues to change as milk production shifts from smaller to medium sized farms to very large farms.

“We’re seeing a real change in the structure of the dairy industry continues to be dominated by more and more larger producers,” explains Scott Brown, an economist at the University of Missouri. “I recently attended the DFA annual meeting [where they explained] the first 25 percent of their milk comes from about 115 operations and the last 25 percent comes from 7,800. That’s a very different landscape for them as well.”

Brown expects dairy producers to see milk prices rebound from the low prices we experienced at the beginning of 2018, but he doesn’t expect them to improve too much by the end of the year despite strong improvements in cheese prices.

“With now what’s $1.60 cheese in market today, if that continues, I think we’ll see milk prices back to where [they were] in late 2017, so better in the second half of this year,” he says.

Still, as most producers will remember, 2017’s prices weren’t above the breakeven line for most farms.

“I don’t think everyone is going to say that they’re going to find 2018 a breakeven year, even in the second half it’s going to be pretty buried,” Brown says.