It’s hard to believe we wrapped up another decade with the turn of the calendar. As we ring in 2020, I think it’s important to take a look back over the past 10 years and to look forward to the next 10.
Over the past decade, milk prices experienced historical highs and lows. The highest highs of 2014 pushed prices toward $30, driven in large part by Chinese demand. The devastating low cycle of 2016 through 2018 put hundreds of dairy farms across the country out of business. As we closed out 2019, milk prices had firmed and provided farmers much-needed relief. Looking forward to 2020, analysts expect Class III milk prices to be no lower than $16 and probably no higher than $19.50. You can read the full price outlook here.
The labor market has also changed dramatically in the past 10 years. In 2010, affordable skilled labor was readily available. Today, it’s harder than ever to keep farm positions filled, let alone maintaining a pipeline of potential employees. A recent labor study of dairy producers from Farm Journal shows 87% of employers pay their employees more than they did 5 years ago, and 64% of them increase wages in order to attract employees. Read more here.
In the trade and export arenas, the dairy industry has both benefited and been devastated in the past 10 years. While total exports of dairy products have grown tremendously in the past decade, 2018 and 2019 were devastating years for dairy farmers because of the ongoing trade wars. At press time, the U.S. House of Representatives had passed the U.S. Mexico Canada Agreement (USMCA). The U.S. Senate is expected to begin marking up the legislation on January 7. Additionally, a phase-one agreement with China was reached in December. While details are still murky, we outlined everything we currently know about the agreement here. We can hope trade turmoil will be greatly reduced going into 2020.
When I reflect back on 2019, I think to myself “ouch.” It was a really difficult year for our family –it might have been for yours too. But we’re on the other side of that now and I’m declaring 2020 to be our year. Let’s kick of the “roaring 20s” with a bang!