USDA's 2024 Forecast Indicates Lower Dairy Income and DMC Payments
Source: The DairyNews
As we navigate through mid-February 2024, the USDA's World Agricultural Outlook Board provides insights into the dairy industry with significant points to note:
1. Drought Impact on Dairy Cows:
Approximately 12% of all U.S. dairy cows were in drought-affected areas as of February 2024. The percentage of dairy cows in drought-affected regions has decreased from the peak of 36%-38% in June and October of the previous year.
Areas with dairy cows facing drought conditions now align with the lows recorded in May 2023.
2. Cash Receipts and DMC Payments Projection:
The USDA's 2024 Farm Sector Income Forecast reveals a decline in cash receipts from milk sales to $45.5 billion, down $900 million from 2023. Dairy Margin Coverage (DMC) program payments for 2024 are forecasted at $264.5 million, a $900 million decrease from the record high of $1.2 billion in 2023.
This reduction in income is attributed to lower milk prices.
3. Farm Sector Economic Outlook:
The Purdue University/CME Group Ag Economy Barometer highlights a more pessimistic outlook among agricultural producers in January, driven by concerns about lower commodity prices and higher input costs.
Producers express worries about a potential cost/price squeeze leading to reduced farm incomes.
4. Carbon Payments and Producer Engagement:
An interesting survey finding reveals that 8% of respondents engaged in discussions with companies about carbon contracts.
Despite engaging in carbon contract discussions, 61% of producers reported being offered payment rates below $10 per metric ton, while only 12% received rates of $30 or more per ton.
5. All-Milk Price Projection:
The USDA's World Ag Supply and Demand Estimates report suggests a slight improvement in dairy cash receipts projections, raising the projected 2024 all-milk price to $20.95 per hundredweight.
These factors collectively contribute to the evolving landscape of the U.S. dairy industry, influencing farmer se
Approximately 12% of all U.S. dairy cows were in drought-affected areas as of February 2024. The percentage of dairy cows in drought-affected regions has decreased from the peak of 36%-38% in June and October of the previous year.
Areas with dairy cows facing drought conditions now align with the lows recorded in May 2023.
2. Cash Receipts and DMC Payments Projection:
The USDA's 2024 Farm Sector Income Forecast reveals a decline in cash receipts from milk sales to $45.5 billion, down $900 million from 2023. Dairy Margin Coverage (DMC) program payments for 2024 are forecasted at $264.5 million, a $900 million decrease from the record high of $1.2 billion in 2023.
This reduction in income is attributed to lower milk prices.
3. Farm Sector Economic Outlook:
The Purdue University/CME Group Ag Economy Barometer highlights a more pessimistic outlook among agricultural producers in January, driven by concerns about lower commodity prices and higher input costs.
Producers express worries about a potential cost/price squeeze leading to reduced farm incomes.
4. Carbon Payments and Producer Engagement:
An interesting survey finding reveals that 8% of respondents engaged in discussions with companies about carbon contracts.
Despite engaging in carbon contract discussions, 61% of producers reported being offered payment rates below $10 per metric ton, while only 12% received rates of $30 or more per ton.
5. All-Milk Price Projection:
The USDA's World Ag Supply and Demand Estimates report suggests a slight improvement in dairy cash receipts projections, raising the projected 2024 all-milk price to $20.95 per hundredweight.
These factors collectively contribute to the evolving landscape of the U.S. dairy industry, influencing farmer se
