BURLEY, Idaho — If market forecasts prove accurate, dairy farmers should see some improvement in prices in 2019.
“But it’s going to be a few tough months ahead and has been (tough) for a few years,” Rick Naerebout, CEO of Idaho Dairyman’s Association, said at the University of Idaho annual outlook seminar on Wednesday.
The global milk supply is trending lower, and there should be a bit of correction in supply and demand this coming year, he said.
Cow numbers are dropping in the U.S. due to financial pressure. But milk per cow is increasing due to improved genetics, sexed semen and producers hanging onto the best producing cows. Growth has slowed to about a 1 percent increase year over year nationally and in Idaho, he said.
“Milk production is starting to slow down, but it’s still positive,” he said.
He expects some negative production in 2019, saying the situation is going to be “messy."
The most bullish U.S. forecast puts next year’s average prices at $1.60 a pound for block cheese, $0.40 for whey, $2.12 for butter and $0.98 for nonfat dry milk.
It looks like U.S. prices will have some premiums over world markets, so it might knock out some milk production in other countries, he said.
Class IV milk in federal marketing orders is forecast at $15.20 per hundredweight, and Class III is forecast at $15.67.
Idaho doesn’t belong to a federal order, however, and milk prices are generally $1 a hundredweight lower, he said.
“We’ve got excess milk in Idaho, 1.5 to 2 million pounds a day,” he said.
Low milk prices are painful, but if Idaho is still producing excess at that price, it’s not sending the right message, he said.
On average, Idaho loses about 15 dairies a year, but it’s had some significant dispersal sales due to lost markets, he said.
“We’ve never seen that before. It’s only the last two years we’ve seen herds go out of business because there’s nowhere to sell milk,” he said.
There had always been a home for all of Idaho’s milk, but now there isn’t, he said.
About 20 processors operate in Idaho, and the top 10 process 90 percent of the milk produced in the state. Leading the way are Glanbia and Jerome Cheese, which process half of the state's milk at a combined 20 million pounds a day, he said.
There was a lot of excitement when Chobani came to Idaho and was citing a need for 6 million to 8 million pounds of milk a day. But that anticipated need turned out to be 2.5 million pounds a day, he said.
IDA is working with the state, cities and economic development organizations to bring more processors to Idaho. Those entities recognize the dairy industry is a steady economic driver. Idaho produces high-quality milk at competitive prices, and there’s pent up desire in the industry to grow, he said.
From a natural resources perspective, Idaho has room for another 75,000 to 100,000 cows. But first, it needs more processing capacity, he said.
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