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U.S. Dairy Sector Faces High Input Costs Despite Strong Demand and Rising Prices

USA 09.07.2024
Source: The DairyNews
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In 2024, the U.S. dairy industry is experiencing robust demand for its products both domestically and globally, with forecasts showing a promising uptick in prices. According to the latest World Agricultural Supply and Demand Estimates report from the U.S. Department of Agriculture, the average all-milk price is set at $21.60 per hundredweight nationally, an improvement from last year though still below the 2022 peak of $25 per hundredweight.
U.S. Dairy Sector Faces High Input Costs Despite Strong Demand and Rising Prices
Josh Maples, an agricultural economist with the Mississippi State University Extension Service, noted, "Dairy prices have strengthened significantly this year and are anticipated to rise further. Key products like Cheddar cheese, dry whey, and butter are expected to fetch higher prices than last year, with both imports and exports slated to increase compared to 2023."

Despite favorable market conditions, dairy producers continue to grapple with high production costs. "The overall profitability of dairy farms hinges on the cost of production, which remains a significant challenge," Maples explained. While feed costs have slightly decreased as corn prices have moderated, other expenses such as equipment, insurance, labor, and interest on operating loans have continued to rise.

This financial strain is contributing to a decline in milk production in the Southeast. The Dairy Alliance reports a decrease in both the number of dairy farms and average herd sizes in Mississippi, reflecting a broader trend across the region.

Addressing these challenges, MSU Extension’s new dairy specialist, Jessica Halfen, is focusing on enhancing dairy cow nutrition and health. Halfen, who joined the team on June 1 and also serves as an assistant research professor in the MSU Department of Animal and Dairy Sciences, aims to improve milk production efficiency and animal health through innovative research on dietary additives and natural compounds.

"The objective is to explore alternative feed sources and identify new compounds that can reduce feed costs and enhance the overall well-being of dairy cows," Halfen stated. Her research is especially pivotal as Mississippi dairies face ongoing production declines, exacerbated by the state’s extended hot summers.

In addition to economic and environmental challenges, the U.S. dairy industry is cautiously monitoring the situation with Highly Pathogenic Avian Influenza (HPAI), which has been detected in dairy herds in Texas and Kansas among other states. Despite concerns, the USDA and U.S. Food and Drug Administration assure that the commercial milk supply remains safe, emphasizing that pasteurization processes and the destruction of milk from affected cows safeguard public health.

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