Dairy producers gathered in South Burlington Tuesday heard some hopeful news: After four years of tough times, milk prices are expected to improve later this year.
The optimistic scenario came from John Wilson, a senior vice president with Dairy Farmers of America, headquartered in Kansas City.
DFA sells more milk than any other co-op in the country, and it keeps a close eye on national and global markets. At Tuesday's conference, Wilson said the days are long past when prices were controlled by local forces.
“We’re no longer an island like we used to be,” Wilson said.
Today, demand in Mexico, Europe and China have a huge impact on prices paid to farmers in Vermont — and Wilson sees potential for U.S. markets in a changing situation in Europe.
“There is some optimism in the second half of the year,” he said.
Wilson told the meeting of the Vermont Dairy Producers Association that global demand, particularly in Europe, is expected to pick up this year for dry milk powder. That’s happening because European countries are finally working through the hundreds of millions of pounds of milk powder they had in storage.
“That’s really good news. That takes the lid, in effect, off of milk powder prices — and indirectly, impacts cheese prices and whey prices as well. So that’s a big story,” he said.
European demand "takes the lid, in effect, off of milk powder prices — and indirectly, impacts cheese prices and whey prices as well. So that's a big story." — John Wilson, Dairy Farmers of America
Wilson projects that prices for milk powder will hit about $17 for 100 pounds, and he said that rebound in turn will lead to fatter milk check paid to U.S. farmers. How much of an upturn, though, is not clear.
That's because farmers are paid a blend price that’s calculated by what their milk is sold for: like cheese, powder or the fluid milk you pour on your cereal. Last year, that blend price hovered around $14 a hundredweight, which is below what it costs many farms to produce it.
And not all the farmers at the conference shared Wilson’s level of optimism.
“I was surprised a little bit by that,” said Bob Foster, who farms in Middlebury and has long been involved in Vermont dairy issues.
Foster said he’s cautiously optimistic for milk prices, but his forecast is a little more conservative.
“I would love for it to get up there – probably means it'll come right back down again,” he said. “But I think it’s a very optimistic projection.”
Foster said he worries about the growing concentration of milk production into larger and larger farms. He also said farmers need to get paid for the ecosystem services they provide, such as keeping the landscape open and sequestering carbon in plants and soil.
