The latest U.S. Milk Production Report brought disappointing news for dairy producers as the USDA revealed that milk production in the 24 major dairy states increased only slightly to just over 18 billion lb compared to June of the previous year. While production per cow saw a modest rise of approximately 1 lb, the total number of dairy animals in these states declined to 8.93 million. This represents an increase of 14,000 compared to June last year, but a decrease of 20,000 from May 2023.
One of the concerning factors leading to this decline in cow numbers is the impact of low milk prices and higher beef prices on farmers. To cope with these economic challenges, dairy farmers have been exploring alternative income streams, which have further influenced milk prices and may continue to do so in the future.
Robin Schmahl of AgMarket.net highlighted the significance of the dwindling cow numbers, attributing them to the financial pressures that dairy farmers are facing. He pointed out that the aftermath of a major fire at a dairy farm in Texas a few months ago is evident in the latest numbers from that state, with Texas experiencing a reduction of 13,000 cows and a 5% drop in production.
The dairy industry is also seeking changes in the Class I Pricing system, which determines the price farmers receive for fresh milk. In response to petitions from the dairy sector, the USDA will conduct a hearing on August 23 in Carmel, Indiana, to potentially revise the federal milk marketing order (FMMO) system.
The American Dairy Coalition (ADC) strongly supports a revision to the current pricing formula for milk intended for retail sale. They are proposing to switch from the ‘average of’ pricing method to the ‘higher of’ method. According to the ADC, dairy producers have incurred a net loss exceeding $1 billion since the implementation of the ‘average of’ method. The CEO of ADC stated that this formula has resulted in a loss of 55 cents per cwt. for farmers on all Class I use nationwide.
These developments underscore the challenges faced by the dairy industry as it grapples with economic pressures, fluctuating prices, and efforts to find sustainable solutions for farmers’ livelihoods.
