Troubled Waters: Dairy Producers Look to Alternative Profit Sources to Stay Afloat
With record milk prices, nobody will argue that 2022 was pretty favorable to dairy producers. Ben Laine, a senior dairy analyst with Terrain, shares that a lot of producers came into 2023 prepared to tackle the changing and challenging market conditions.
“I think the issue is now it has gotten worse than I think a lot of people initially thought and it's gone on for longer,” he says, sharing that a positive turnaround likely isn’t in the near-term forecast. “I think before you see any kind of positive glimmers of hope it’ll be more like 2024 at this point.”
According to Laine, there are always going to be concerns about macroeconomic pressures on consumers. And while inflation is cooling off on the dairy side, prices remain elevated, and people still feel under pressure.
What remains unknown is if we will pull out of the year without a major recession. Laine shares that everyone kind of assumed that midway through 2023 we’d be entering into a recession.
“Now it seems like that continues to get pushed off. We're definitely and by no means out of the woods,” he notes. “Going forward it's still going to be a risk. There are still plenty of geopolitical risks going on. And exports are going to be a little bit of a challenge this year. We're definitely at a tough spot, although I think the second half of the year looks better but there's still some risks out there.”
Laine shares that producers have turned elsewhere to generate alternative profit sources to help their bottom line, like beef-on-dairy.
“I think that's been a big opportunity, especially with a strong beef cattle market,” he says. “I think that those sorts of opportunities like looking at strengthening revenue and looking beyond just milk and continuing to work on efficiency and in managing heifer inventories and managing revenues on the beef side as well as those opportunities present themselves. “
With the milk price not looking promising compared to last year, Laine says that taking advantage of some opportunities elsewhere will help producers push past what we hope is the bottom of the milk market in 2023.
