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Northeast Milk Marketing Update | Farm Credit East Northeast Production Cost Index Reaches New High
Volume 13, Issue 6
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Northeast Milk Marketing Update
Farm Credit East’s May 2019 Milk Marketing Update report presents two different perspectives from the field of milk marketing: Dr. Mark Stephenson, Director of Dairy Policy Analysis at the University of Wisconsin, and Lucas Fuess, Director of Dairy Market Intelligence at HighGround Dairy.
The articles examine the production, movement, processing and marketing of milk and dairy products across the United States and specifically in the Northeast.
While the dumping of milk and dairy producers losing markets have garnered headlines, the issues facing milk marketing are complex, and go beyond a simple case of supply versus processing capacity.
Regional shifts in milk production, changes in processing capacity across the country and shifts in consumer demand all combine to form an extremely complex network of milk movement, processing and marketing.
There are indications as of 2019 that milk production and processing capacity in the Northeast have come into closer alignment than in recent years, leading to a decrease in surplus milk, and hopefully, higher prices for producers in the region.
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Farm Credit East Northeast Production Cost Index Reaches New High
It’s not your imagination – it has been getting more expensive to produce farm products lately.
While revenues have been largely stagnant, Farm Credit East’s Northeast Production Cost Index reached a new high in March after three consecutive months of increases.
The Index, updated monthly, represents the relative costs of producing farm products in the Northeast U.S. data is taken from two primary sources: the USDA’s Census of Agriculture and the USDA National Agricultural Statistics Service Agricultural Prices report. The Census of Agriculture, which is published every five years, reports the actual dollars spent in various categories. This provides the weighting for the index. The NASS Agricultural Prices report notes relative changes in a number of cost categories – everything from labor costs to building materials to fertilizer.
As an example, labor costs represented 24.5% of overall farm spending in 2017, so changes in labor costs are weighted more heavily than, for example, changes in land rent, which represented only 1.9% of Northeast farm spending.
The index reached a value of 110.91 in March 2019, with 2011’s costs representing a base of 100. This means that overall costs have risen by approximately 11% since 2011. Some notable areas of increase in the last year have been labor costs, gasoline and diesel fuels, and supplies and repairs. Most other costs are slightly higher.
Editor: Chris Laughton
Contributors: Tom Cosgrove, Lucas Fuess, Mark Stephenson and Chris Laughton
Farm Credit East Disclaimer: The information provided in this communication/newsletter is not intended to be investment, tax, or legal advice and should not be relied upon by recipients for such purposes. Farm Credit East does not make any representation or warranty regarding the content, and disclaims any responsibility for the information, materials, third-party opinions, and data included in this report. In no event will Farm Credit East be liable for any decision made or actions taken by any person or persons relying on the information contained in this report.