Recent USDA estimates show a decline in net farm income in the year ahead for most producers, but there is one bright spot. It’s not milk, but it is another commodity that can have an impact on a dairy farmer’s bottom line.
“They project we [farmers] will be making less money this year because of rising costs and falling prices,” said Dan Basse, the president of AgResource Company, during the Professional Dairy Producers of Wisconsin’s Business Conference. “On the species side, dairy is part of that.” Milk price estimates are down more than $4 per hundredweight.
“The only one bucking that trend,” he continued, “is the beef side of the plate, or the cattle market, which is going to see higher highs, record highs we think, and a better opportunity for those farmers going forward.”
Basse predicts beef will be the big bull market this year, pointing out that the U.S. beef cow herd is at its lowest level since 1962. According to Basse, their modeling shows that cattle prices will go over $2 a pound later this year or in early 2024.
While some states have grown in milk production and dairy cow numbers despite high input costs and weakening milk prices, these record high beef prices may counter that.
“This is probably the best chance for Wisconsin and U.S. dairy to see a production decline as more of you cull your herds more aggressively,” Basse said.
He emphasized the opportunity that awaits dairy producers with a contracted beef cattle herd and strong consumer demand for this protein source.
“U.S. dairymen must step up,” he stated. Breeding to beef, putting in beef embryos, and producing those crossbred calves will be important, Basse noted. “We all need to do our share to bring more beef to the table because America is going to be needing this long term,” he said.