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Economist projects dip in 2021 milk prices

A dairy economist says he’s concerned ad-hock payments to dairy farmers could lead to more milk production.

Marin Bozic with the University of Minnesota tells Brownfield the Coronavirus Food Assistance Program direct payments are helpful to a farmer’s bottom line in the short-term but are likely to also lead to dairy farm investments.

“Maybe they will introduce robots, maybe they will add a few hundred cows.  Those decisions make a lot of sense on every individual farm, collectively however they, more often than not, result in oversupply.”

Bozic says at the same time, the Michigan cheese plant, a joint venture between Glanbia, Dairy Farmers of America, and Select Milk Producers will be opening with its own timeline of expanded production.

“They will be ramping up over a six-month period, so heading into spring flush 2021, we will have eight million pounds of milk more being converted to cheddar cheese.”

And in Minnesota, First District Association will be completing an expansion that will increase processing up to two million pounds per day for cheese production to which Bozic says…

“We will not suddenly as a nation be consuming that much more cheddar cheese per capita just because there’s a new plant out there.”

He expects a narrowing of the block barrel spread and a hit on Class III prices during the first half of 2021 as a result. 

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