A recent increase in the milk price has producers hoping they've seen the worst in terms of low prices in 2016.
But that might not be the case, according to Mark Stephenson, an Extension dairy policy analyst at the University of Wisconsin at Madison. In a recent audio interview, he said that farmers can expect milk prices to drive lower in the near term before finally improving in the third quarter.
“We aren’t looking at anything like 2009,” Stephenson said. “If you thought that 2015 was OK, you’re going to think 2016 is OK too.”
Listen to the full interview* below:
But that's about it. Dairy producers can expect another year of “treading water," said Stephenson, who cited increased milk production and softer export markets the reasons for downward price pressure in the first three months of 2016.
Unlike 2009, though, farm balance sheets are strong, and “people have some staying power," he said.
He advised farmers to stay the course, but warns the market can’t handle much of an increase in milk production this year.
In terms of the industry overall, Stephenson said he expects some reduction in cow numbers in Wisconsin. “We are probably going to trim some cows out of the herd,” he said. “It’s not that we are going to lose farms at an increased rate, but consolidation is going to continue.”
*Audio courtesy of University of Wisconsin College of Agricultural and Life Sciences