2018 Dairy Outlook

Mark Stephenson, Extension Dairy Policy Analyst
Center for Dairy Profitability
Department of Agricultural and Applied Economics
UW-Madison College of Agricultural and Life Sciences
mwstephenson@wisc.edu
Phone (608) 890-3755

NOTE: Third in a series for 2018 Wisconsin Agricultural Outlook Forum Jan. 25, 2018
2018 OUTLOOK FORUM REGISTRATION INFORMATION AGENDA & REGISTRATION
https://renk.aae.wisc.edu/ag-outlook-forum/

Total Time – 3:03

0:10 – What to expect in the Farm Bill
0:47 – Other policies affecting dairy farmers
1:16 – Trade issues
2:37 – Good news for dairy producers
2:54 – Lead out

 

TRANSCRIPT

Lorre Kolb: We’re visiting today with Mark Stephenson, Center for Dairy Profitability, University of Wisconsin-Madison/Extension in the College of Agricultural and Life Sciences. Mark this year is a Farm Bill year, what does that have in store for farmers in Wisconsin and nationally?

Mark Stephenson: It is a Farm Bill year; it rolls around about every five years. Last time we got a brand new program – the Margin Protection Program – and while there was a lot of enthusiasm for what that might be, the reality over this last several years is that it’s not been a very active program. It hasn’t been sensitive enough to trigger payments when farms felt like they needed payments. So I suspect what we’ll see in this Farm Bill are going to be modifications to that program that may make it more sensitive and may cut the cost of the premium.

Lorre Kolb: Do you see any other policies that are going to affect dairy farmers?

Mark Stephenson: Well maybe not too much from the Farm Bill. There are a couple of other things that are ongoing. One is a program called dairy revenue protection. These aren’t programs that are going to lift the prices any and these aren’t programs that are going to just provide a check should prices be low, these are programs that are going to require investment on the part of producers to manage their risk.

Lorre Kolb: How is trade with dairy producers?

Mark Stephenson: Well trade is one of the reasons that we’ve got prices as low as they are. For a little over more than a decade, we have been a major exporter of dairy products. That really happened fairly quickly for us and we’ve become reliant on those trade issues. A change in milk production of plus or minus one percent actually sends shudders through the markets and gives us pretty big price ranges. We’re now talking about having 14 to 15 percent of our milk production being exported. So when exports are slow for us, that pushes back into our prices and it is impacting what farms are seeing. The rest of the world has been increasing milk production this last month almost five percent up. Five percent for major exporters is a big number. We have been up about 1 ½ to 2 percent, so not really crazy increases in production, but this is just too much product for the world to absorb right now. With regard to trade, we are involved right now in re-negotiating some major trade agreements like NAFTA. I think a lot of the dairy industry is concerned about what happens if we just decide to throw NAFTA away. Does that mean that we are no longer this preferred provider of dairy products.

Lorre Kolb: What’s a positive for dairy producers?

Mark Stephenson: Well we’ve had some years of relatively low input costs, meaning feed. Corn prices have been in the 3 and ½ dollar range and that’s been fairly good for folks who are buying a significant amount of feed.

Lorre Kolb: We’ve been visiting with Mark Stephenson, Center for Dairy Profitability, University of Wisconsin-Madison/Extension in the College of Agricultural and Life Sciences.

 

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