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Dairy Producers Face Tightest Margins on Record

World 05.01.2024
Source: The DairyNews
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As we step into the new year, dairy producers are grappling with persistently low milk prices. 2023 marked a financially challenging period for dairy producers, with some of the lowest margins recorded since the inception of the Margin Protection Plan, as highlighted by Stephen Cain, the senior director of economic research and analysis at the National Milk Producer Federation (NMPF).
Dairy Producers Face Tightest Margins on Record
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In June and July of 2023, margins dropped below $4, reaching the tightest margins on record, according to Cain, who shared this insight at the 2023 Milk Business Conference in Las Vegas.

The squeeze on milk production isn't confined to the U.S.; it is a global phenomenon. Joe Outlaw, a professor and Extension economist at Texas A & M University, emphasizes the need for improved prices, especially for larger dairy producers attending the Milk Business Conference, who have witnessed growing operating loans due to increased input costs and rising interest rates over the past year.

Drawing Attention

Jackie Klippenstein, senior vice president and chief government and industry relations officer at Dairy Farmers of America, expresses concern about the dysfunction in commerce. She notes a shift in the dynamics of Congress, making it challenging to achieve bipartisan collaboration on agricultural bills.

Outlaw acknowledges that the current Dairy Margin Coverage (DMC) program is functioning effectively. While there are discussions about updating some production history numbers in the new Farm Bill, Outlaw and Cain agree that a complete overhaul of the DMC program is unlikely.

Potential Changes in DMC

Klippenstein highlights the need to revisit the current production cap of five million pounds in the DMC program. She suggests that the limit was set when the DMC was initially established, representing the average dairy herd at that time. However, with the average dairy herd now producing 8 million pounds, there is a call to push the cap higher.

Future of the Farm Bill

The Farm Bill has taken a backseat as other issues occupy the Senate and House agricultural committees. Outlaw, drawing on his experience working on eight farm bills, warns that if the bill isn't passed by February, agriculture might have to wait two years for a new farm bill due to the impending election.

In the face of a potentially protracted Farm Bill process, Outlaw encourages farmers to voice their concerns and opinions, emphasizing that action is often prompted by crises in the complex landscape of Washington politics.
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April 2024
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