Dairy Industry Trends: Strong Demand Offsets Rising Costs

Dairy Demand, Prices Help Offset High Input Costs

In Starkville, Mississippi, despite encouraging milk prices, margins continue to project as narrow for dairy farmers in 2024. According to the latest report from the U.S. Department of Agriculture’s World Agricultural Supply and Demand Estimates, the average national milk price is predicted at $21.60 per hundredweight. Although indicative of an improvement from the previous year, it remains lower than the 2022 level when prices were around $25 per hundredweight.

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Strong Dairy Product Demand

“Demand for dairy products in the U.S. and globally is strong this year,” said Dr. Joshua Gilchrist Maples, an agricultural economist with the Mississippi State University Extension Service. Dairy prices are reported to be stronger in 2024, with expectations of further increases. All segments of the market, including cheddar cheese, dry whey, and butter, are expected to strengthen this year compared to the previous year. Both imports and exports are expected to surpass 2023 levels.

However, despite the positive market, input expenses remain a significant challenge for dairy producers. “The milk price is an important indicator of the overall dairy industry, but the profitability of a particular farm relies heavily on its production cost, which has been an ongoing challenge,” explained Maples. Feed costs have slightly subdued thanks to moderated corn prices, but other costs such as equipment, insurance, labor, and interest expenses associated with operating loans continue to rise.

Added to this are the shrinking dairy production figures. According to The Dairy Alliance, Mississippi is currently home to 48 dairy farms, down from 55 in 2022. Factors driving this decline include increased production costs and the challenges presented by extended hot summers.

New Research on Dairy Cow Health and Nutrition

Addressing these challenges is one of the primary goals of Dr. Jessica Halfen, MSU Extension’s new dairy specialist. Halfen, whose postdoctoral research at Virginia Polytechnic Institute and State University focused on dairy cow nutrition, health, and new technologies to understand their immune systems, aims to “improve understanding of the metabolic pathways and mechanisms of action of these compounds.”

HPAI Threat: Minimal Impact So Far

Almost four months have passed since the USDA first confirmed the Highly Pathogenic Avian Influenza (HPAI) in dairy herds in Texas and Kansas. Mississippi, however, remains unaffected. While the presence of HPAI is concerning, it has yet to significantly impact dairy production and prices. According to Maples, milk production remains largely unaffected, and dairy prices have generally increased. The industry, however, remains alert to the unfolding situation.