A year ago, we were asked by a dairy publication for our response to the question, “In a word, what’s the mood as 2021 gets under way?” Our response was “Uncertainty.” To answer this same question a year later, we would still include ‘uncertain’ along with ‘optimism’ and ‘concern.’
As we move into 2022, farmers are facing rising inflation and increasing costs that are negatively impacting their business, similar to most other industries across the U.S. and globe. The shortage of labor and plethora of supply chain issues continues to wreak havoc, leaving no industry or commodity untouched. Farmers already have a lengthy list of things to be concerned about, but these increased costs without knowing when they might return to a lower price causes uncertainty.
Yet, there’s reason for optimism when looking at the futures prices. In a recent Hoard’s Dairyman webinar, UW-Madison’s Director of Dairy Policy Analysis, Mark Stephenson estimated a $22 average All-Milk price, which would be $2-$2.50 higher than in 2021 when the average All-Milk price was $19 per hundredweight.
To some farmers, the forecast for higher milk prices is a sigh of relief. But for farmers to be able to embrace these high milk prices, overall costs of production need to remain in check. Farmers will need to be creative to mitigate increases in their input costs.
Other reasons for optimism include the demand for dairy being very strong. The overall U.S. milk supply is expected to be challenged by various weather conditions across the globe, helping to tighten supply and demand. U.S. dairy exports that were tremendous in 2021 appear to be on track for another excellent year in 2022.
Further, research continues to show dairy’s critical role in the diet of any generation, and dairy continues to be a popular food staple as households embrace eating at home.
For the U.S. dairy to continue to grow, FarmFirst will be advocating for meaningful trade policies to sell more product to more countries while maintaining a safety net like the Dairy Margin Coverage program, that kicks in when feed costs are high, and margins are tight. Further, FarmFirst will be pushing for Congressional action on the labor shortage and other supply chain issues that continue to plague agriculture industries.
Regardless of what word one might use to describe the year ahead, FarmFirst will always be advocating for meaningful policy changes to improve your ability to dairy farm.
