By Jamie Martin
In a significant turnaround from previous years, US dairy farmers are witnessing an increase in profits thanks to higher milk prices and reduced feed costs, the USDA's September outlook report reveals.
This year, wholesale milk prices have been adjusted upwards to $23.05 per hundredweight, a notable rise spurred by a decline in the national dairy herd and overall milk production. This decrease in supply, alongside lower costs for corn, alfalfa hay, and soybean meal, has improved farm margins, reaching a high of $12.33 per hundredweight in July—the peak for 2024.
The outlook for 2025 suggests a continuing trend of declining milk production, which is expected to further drive up prices.
Despite this favorable scenario, challenges remain, such as a tight supply of heifers which could temper herd growth. Additionally, higher dairy prices may affect competitiveness in domestic and international markets, particularly as food service demand decreases and operational costs for restaurants rise.
Grocery spending on milk and dairy products remains robust, indicating a shift towards more at-home consumption. This dynamic could encourage dairy farmers to expand their herds or enhance production capacities, particularly in organic milk and other premium segments.
The emphasis on sustainability and business viability continues to shape the industry's future, aiming to balance increased income against long-standing challenges of high operational costs.
Photo Credit: istock-tanyasid
Categories: National