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Tariffs expected to beat already depressed milk prices

Analysts say dairy farmers could be further into the red for the remainder of the year if dairy tariffs go into effect this week.

National Milk Producers Federation economists say Mexico’s retaliatory tariffs on most U.S. cheese in combination with China’s retaliatory tariffs on nearly all U.S. dairy product imports could cut future prices by about $1.10 per hundredweight for the rest of the year.

Michigan Milk Producers Association president Ken Nobis says the dairy industry wants the Trump Administration to remove tariffs on Canada and Mexico until after NAFTA is complete. He says dairy prices were headed toward breakeven in the fourth quarter but since tariffs were announced, futures have turned south.  “We’ve gone through three years of breakeven or negative margins and people are only willing to live off their equity so long.  We’re losing producers right now, not just in Michigan, Wisconsin is losing producers, and the Northeast is losing producers.”

Mexican tariffs on fresh American cheese and some other products will increase to 25 percent Friday, and tariffs on hard, semi-hard, grated, shredded and powdered cheese will increase to 20 percent. China will also enact 25 percent retaliatory tariffs on more than 20 different dairy categories, including all forms of milk, whey, cheese, butter, buttermilk, and yogurt.

USDA was projecting 2018’s average all-milk price at $16.80 per hundredweight, about 50 cents lower than last year.