Some attention grabbers in the dairy industry right now include cows moving out of the Southwest, new dairy processing facilities, spring flush and FMMO reform. Director of Dairy Policy Analysis at UW-Madison Mark Stephenson gives the Mid-West Farm Report insight on these headliners.
He explains the Southwest is seeing dairy farms come offline as margins become too thin. Unlike the Midwest, many farmers in the Southwest don’t grow their own animal feed. With feed prices going up, dairying is no longer financially viable. Cattle are exiting the market or moving to other parts of the country.
Areas where cattle are migrating include where new processing facilities have come online or added capacity. This includes Michigan, western Minnesota and the Dakotas.
In other news, spring flush may not bring in the milk it usually does this year to stock up cheese for the busy season. He says dairy cow numbers are stable and milk per cow has been moderate. He says the spring flush is when, traditionally, Wisconsin makes a lot of cheese. This cheese is stored for when demand spikes in the fall. A light spring flush will be a bullish sign for dairy markets for the rest of the year.
On the policy front, Federal Milk Marketing Order reform is top of mind for several dairy groups from Dairy Business Association to Farm First Dairy Cooperative. While solutions from each group look different, Stephenson expects the push for reform from all players in the dairy food chain will lead to a hearing soon.