Stephenson: Dairy exports boost milk prices
Once an afterthought for U.S. marketers, dairy product exports now make up about 15% of total U.S. milk production, according to Mark Stephenson, Dairy Policy Analyst with the University of Wisconsin-Madison. Today, the U.S. is the third-largest dairy exporting country in the world.
Stephenson recently addressed the current and future state of dairy product exports with UW-Madison communication specialist Sevie Kenyon. The interview (audio link) was the fourth in a series related to the 2013-14 Wisconsin Agricultural Outlook Forum and release of the annual “Status of Wisconsin Agriculture” publication.
“Exports were something that we didn’t really think too much about in this country,” he explained. “In fact, a decade ago exports accounted for about the same volume of dairy products as imports did. It was a wash. But, in 2005-2007, we really started to have some circumstances that let exports grow. The dollar became weaker, so it makes our products look cheaper to other countries that would want to buy them. We had some problems in other exporting countries like the European Union and Oceania, and low and behold the U.S. found itself exporting dairy products.”
Historically, with world prices considerably below U.S. domestic prices, export sales required selling products at a discount. However, world prices rose, closing the gap, making foreign markets more attractive to U.S. producers.
Cheese and whey powder, a co-product cheese production, are primary exports from Wisconsin.
“We’re certainly not left out of exports here in Wisconsin because we’re in the middle of the country, not close to a port,” Stephenson said. “We are selling a fair amount of dairy products overseas.
The U.S. has now become dependent on the export market, he noted.
“We’d be in real trouble if we didn’t have it,” Stephenson said. ªWe’re currently exporting more than 15% of our milk production in dairy products overseas. So if that stopped tomorrow, we would have a flood of dairy products in our domestic market – which isn’t happening. We’re becoming a very consistent and much more knowledgeable world exporter.”
PDPW plans marketing series
Understanding marketing strategies and tools can help grow your dairy's profitability. The Professional Dairy Producers of Wisconsin (PDPW) will host a six-session series to help producers understand those strategies and tools, beginning Jan. 30.
Lead instructor Carl Babler will cover:
• Understanding agricultural commodity markets and marketing
• Developing an effective marketing plan
• Basics of market analysis
• Understanding and utilizing cash, futures and options markets
• What marketers and hedgers should know
All classes will be held at Blackhawk Technical College, Janesville, Wis. The first class in the 2014 series is Jan. 30, with remaining course dates decided by participants. Cost is $450 per farm (maximum two individuals per farm). For more information, phone 800-947-7379 or click HERE.
Source: Professional Dairy Producers of Wisconsin
Crop growers told to prepare for bumpy price ride
U.S. crop producers should prepare for several years of lower prices, Ohio State University ag economist Matthew Roberts told members of the American Farm Bureau Federation during the organization’s recent annual convention.
“The last six years have been extraordinary years if you are a row crop producer,” said Roberts, an associate professor at Ohio State University’s Department of Agricultural, Environmental and Development Economics. “It's been the best six years in history. The next six years will not be like that.”
Strong demand from China and the ethanol industry altered corn and soybean production globally during agriculture’s recent boom period. A decent U.S. crop year in 2013 and curbed growth from ethanol may mean some acreage will revert back to pasture and forage crops.
“The question is how fast, after a grower has made an investment into row crops, we’ll likely have to see losses before that land reverts to another use,” Roberts said.
Roberts advised large, aggressive and young growers to prepare for a bumpy ride by putting cash in the bank.
“We are entering a four- to five-year period of lower costs and profitability. I think we’ll see some farms (that expanded aggressively) in the Corn Belt go bankrupt,” he predicted. “Put one year’s worth of land charges (above normal working capital needs) in the bank as soon as possible.”
DHM Dairy Marketing/Marketers: Jan. 24
Stephenson: Dairy exports boost milk prices
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