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April 8, 2016

Market Impact of Land O’ Lakes Base Plan Unclear

 |  By: Anna-Lisa Laca

On Thursday, Land O’ Lakes announced they would fully implement a national base plan by the end of 2016. What that means for the market is unclear. Three market analysts weigh in, all with different opinions.

  • Nick Buyse of FCStone Intl. says there will be no substantial impact because of the current market environment.  “I think the market is still concerned with the oversupply in the EU and global demand factors at this time,” he says. “When the domestic milk market does tighten further, this decision will exacerbate the issue.”
  • Naomi Blohm of Stewart-Peterson, LLC., says it’s hard to determine market impact without knowing all of the details. 
  • Robin Schmahl of AgDairy says he thinks the decision could provide minor psychological support to the market as it is implemented. He admits it likely won’t slow production much. “However, if it is not industry wide, others farmers shipping to other plants will likely make up the difference if it remains profitable for them to increase milk production,” he says.  The biggest impact Schmahl sees it on the Land O’Lakes’ members. “It puts their patrons in a bind if a farm wants to grow their business to bring in a family member by being a member of Land O' Lakes,” he says.

Do you think the Land O’ Lakes base plan will affect milk prices? Let us know, leave a comment below.