Milk production is going up in the U.S., Argentina, and New Zealand while declining in Australia and the European Union.
USDA’s July World Markets and Trade report says U.S. farmers increased herds in anticipation of new processing capacity. U.S. exports were also strong in the first five months of this year supported by competitive prices for U.S. butter and cheese.
New Zealand is expecting more production this year, with a stable herd and strong export demand for cheese and butter.
Production declines continue in the European Union, as farmers are pressured by poor profitability, a smaller herd, and environmental regulations. USDA says the EU will likely focus on supplying strong demand for cheese and less on butter and powder production.
India has the most milk cows with 62 million head, followed by the European Union with 19.2 million head and Brazil with 17.1 million cows in milk. The U.S. is fourth with 9.4 million dairy cows. Milk production is led by the European Union with 145.3 million metric tons, followed by the U.S. with 103.5 million metric tons.
USDA expects cheese exports to go up 14% for New Zealand, 7% for the U.S., 5% for Australia, and only 1% for the European Union. Butter exports are forecast to go up 80% for the United States, while New Zealand exports grow just 6% and the EU goes down 5%. Skim milk powder exports are expected to grow 4% for New Zealand, stay steady for the EU, and fall by double-digits in the U.S. and Australia. Whole milk powder exports are expected to grow only 2% in New Zealand, while falling in Argentina, Australia, and the EU.
EDITOR’S TAKE:
Once again, evidence of strong market demand driving additional supply capability in the U.S. and select other countries. However, this article also reminds us of the negative impact that rising costs due to over regulation can have on profit margins. Overall, world demand is increasing, and U.S. producers are working hard to do their part to meet it head on. The key will be strong prices for milk, cheese and butter coupled with managing expenses and maintaining profit margins at the farm level.
To help manage expenses with your dairy producers make sure you mention AgPack®, which provides huge potential savings for them and a way to help conquest more deals and protect your margins as well. We like to call it “hood cash” – a return on truck investment.
