June 26, 2023

Ag Economy

Celebrating National Dairy Month

By: Chris Laughton

It’s National Dairy Month, and we couldn’t let the month of June pass by without recognizing the region’s largest agricultural sector — the dairy industry. Dairy and related processing constitute the top agricultural sector in the region, with more than $18.7 billion in direct sales, $34.6 billion in total economic impact and more than 120,000 jobs supported. 

There’s no doubt the dairy industry has suffered challenges over the past years, including the COVID-19 pandemic and related supply chain issues. But the industry has prospered. In fact, our soon-to-be-released report, 2022 Dairy Farm Summary and 2023 Mid-Year Outlook, indicates that 2022 was a remarkable year for the Northeast dairy industry — giving us all the more reason to celebrate this important industry this month and recognize the hard work of the industry’s prouducers year round. 

The 2022 Northeast Dairy Farm Summary & 2023 Mid-Year Outlook reviews the financial results of 139 Northeast dairy farms, and discusses the year that was 2022. The report also contains dairy market outlooks from four prominent dairy economists: Christopher Wolf of Cornell University, Rob Fox of CoBank, and Marin Bozic and Brian Walton of Bozic, LLC. 

Perhaps the biggest trend of 2022 was inflation: Both milk prices and input costs set new records. Thankfully for the industry, most farms saw milk prices increase to a greater extent than input costs, resulting in 2022 ranking second in terms of profitability (at least in nominal terms), in the 43 year history of the Dairy Farm Summary

Milk prices rose sharply in 2022, reaching a peak of $27.30/cwt. (USDA all-milk price) in May 2022 and finishing at an average of $25.55/cwt. for the year. As noted, input costs rose as well, and the Dairy Farm Summary net cost of production increased to $22.87/cwt., the highest in DFS history. 

As we turned the calendar to 2023, things changed significantly. Milk prices fell by more than $6.00/cwt. from the prior year to settle at $20.70/cwt. for May 2023. Notably, however, input costs have been slower to decline, and many have not decreased at all, dramatically shrinking margins for producers. 

So what’s in store for the remainder of the year? The report concludes with dairy market outlooks from prominent dairy economists who express uncertainty for what’s to come. Their analyses cover federal dairy policy, dairy retail markets and exports, and explore key trends in dairy markets as well as risk management strategies for a volatile marketplace.

View and download the report here.

Despite some uncertainty in dairy markets, one thing we know for sure is the tenacity of the region’s dairy farmers. They’ve endured challenges in the past and continue to produce top quality products for consumers in the Northeast and beyond. Happy National Dairy Month!

Tags: dairy, outlook, report, saluting northeast ag

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