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Economist concerned about growing milk production

The most recent USDA milk production figures have a dairy economist concerned.  Mark Stephenson with the University of Wisconsin’s Dairy Profitability Center tells Brownfield milk production levels are on a trajectory he warned about before, suggesting a slowdown in milk price recovery this year, even before the coronavirus outbreak. “You throw the coronavirus on top of that strong milk production, mostly out of western states but not entirely, and you know, we’ve got an industry that’s just perhaps has got more milk than it knows what to do with.”

Stephenson says one thing that might help would be to revive the federal government’s suspended Dairy Product Price Support Program for limited temporary purchases of cheese and powder.  Stephenson tells Brownfield it might be time to cut production. “I think we’re also going to have to look in the dairy industry at how do we try to tighten up the milk production a little bit. This is unusual. We should not feel free to produce just as much milk as we want to right now.”

Stephenson says this year might be worse for dairy producers than the previous two years, and he encourages them to do some price forecasting now and work with lenders early. “If your cash needs are going to be greater than you expected, then you might need to see what you can do in terms of drawing on your credit to get a little bit larger loan or perhaps stretch some of your loan payments out to help you get through this time period.”