MADISON (WKOW) — Low demand for milk and other economic forces conspired to force farmers and creameries to dump milk in recent weeks, but analysts believe that the worst is now behind us.
Wisconsin dairy farmers benefited from a rapidly expanding export market, particularly to Asian countries, in recent years. But when those same markets pulled back on their orders, farmers had more milk than they knew what to do with.
The U.S. exported over 16 million fewer pounds of cheese in May 2023 compared to the same period a year earlier, according to the U.S. Dairy Export Council.
Selling on a global scale also involves global competition. Wisconsin cows now sell alongside those from Europe and else where. More competition drives down prices.
Staffing challenges continue to plague many industries as baby boomers retire in droves and younger generations are simply too small to fill the holes. This is also true for the creamery industry, where a lack of adequate staffing means that operations cannot process as much milk as they once did.
Combine all of these forces together with naturally higher milk production from cows in the spring months, and the market is flooded.
Milk’s short shelf life means that producers cannot store excess product and wait for prices to recover. All the extra gets dumped.
Phil Plourd, president of Ever Ag Insights, the market analysis arm of an agricultural logistics company, acknowledges that milk dumping hurts the dairy industry’s brand image.
“It’s not a good look, right? And it seems wasteful, and it’s like ‘Oh, this is good milk, what the heck are we doing?,'” he said.
Despite these factors all pressing down on the price of milk, Plourd believes that prices will likely rebound in the near future and bring an end to the majority of milk dumping for the year.
Hotter weather in July and August reduces milk production in cows.
Farmers will also likely respond by reducing their herds, Plourd said. High prices for beef will offer some additional encouragement.
Prices have already moved in a promising direction for farmers in the past week. The cost of butter and a block of cheddar rose two and ten percent respectively.
“We usually find our way out of it before too long,” Plourd said. “And it can be a painful process, but the people in the industry are generally resilient.”
