Anyone who thought the September 2014 $25.92 mailbox price was the new normal was delusional . . . 2014 was a career year for the American dairy farmer as noted in the item "Should we revisit federal dairy safety nets?"
I think most of us understood that and we used that money to fix our balance sheets and build liquidity. The past year (2015) was not a bad year and this year isn't great, but with feed costs down, we are coping.
There are two areas in the world that are rapidly growing milk production in response to what I would call irrational boosterism. The Upper Midwest of the U.S. and certain parts of Europe are swimming in milk this spring in response to elevated production fueled not by current economics, but by a desire to grab market share. We will see how that plays out but numbers don't lie.
The fact is that income over feed cost margins are within historical norms. Therefore, a safety net that is designed to kick in only when there are catastrophic losses should not be activated at this time.
- Geoffrey Vanden Heuvel, California
(c) Hoard's Dairyman Intel 2016
March 28, 2016