I’m not a big milk drinker, but before you dairy farmers frown on me, I have a consolation.
I’m a cheese lover — a sprinkle of Parmesan, a couple of chunks of cheddar, a bit of blue cheese, a slice of Swiss. Everything’s better with cheese!
My local (non-Walmart) grocery store had cheese on sale this week for a steal at $2.49 a pound. As a consumer, I was delighted. However, when I think of what that means for dairy farmers … not so much.
Dairy revenues have painfully dropped 35% over the past two years, with overproduction on a global level. A strong U.S. dollar has resulted in reduced imports of American milk.
To compound the pain, and as a result of the tensions surrounding the conflict in Ukraine, Russia banned imports of food from the U.S., Australia, Canada and Europe in August 2014.
While dairy prices are slowly inching back up and are projected to continue that ascent, there are plenty of forces tugging them down, including low world market prices, less demand, a strong U.S. dollar, and increased milk supplies and inventories.
It’s not just dairy, as every farmer can attest. The current farm economy calls for endurance, resourcefulness and resilience, as well as careful planning.
Help is on the way
There has been some government assistance to help farmers cope. USDA announced in August plans to purchase $20 million (about 11 million pounds) in cheese products. To date, it’s spent $7.2 million of that on 3.4 million pounds of cheese.
Also, in October USDA pledged an additional $20 million in cheese purchases for food banks and other food assistance recipients. So, that’s $40 million total in cheese.
Dairy farmers also got $11.2 million in payments in August through the Dairy Margin Protection Program.
And, for all growers, more than $7 billion in Agriculture Risk Coverage and Price Loss Coverage payments are being issued for the 2015 crop year.
With per capita consumption of dairy not expected to expand significantly at home, overseas markets become increasingly important to producers’ returns.
A new report by the USDA’s Office of the Chief Economist shows that continued growth of the U.S. dairy sector could be greatly expanded through trade. Specifically, the Trans-Pacific Partnership could create an additional $150 million to $300 million in annual U.S. dairy exports.
The TTP agreement covers 12 countries and expands dairy market access in several key Asian countries, and provides new access into Canada.
In the meantime, farmers will rely on the same resilience and resourcefulness they have in past downturns. Undoubtedly, it will also include a healthy dose of faith and hope.
Excuse me now while I make myself a grilled cheese!