University of Kentucky Livestock Economist Kenny Burdine said reports show a 3.4% decrease in dairy cows between 2016 and 2017. In 1980 there were about 250,000 in the state, said Burdine. Now, there are only 57,000 dairy cows, he said.
Burdine said dairy producers are also unhappy with a government assistance program that has shown little benefits to the struggling industry. Producers are hoping changes in the next Farm Bill will increase support from the Dairy Margin Protection Program–but exactly how remains unknown.
“The Dairy Margin Protection Program (MPP) is set up where producers can, I hate to use the word insure, but can insure a margin of milk price over feed cost.” Burdine explained.
Burdine said there are two reasons producers aren’t happy: they don’t feel the feed equation represents the industry and most producers didn’t choose high enough coverage levels.
The USDA paid approximately $11.2 million dollars in financial assistance to American dairy producers enrolled in the 2016 MPP- Program. According to a USDA press release, the payment rate was the largest since the program began in 2014. The narrowing margin between milk prices and the cost of feed triggered the payments, as provided for by the 2014 Farm Bill.
In addition to increased production, Burdine said export levels have remained flat since a record high in 2014. But, he said the market has stabilized after a record two-year decline.
“Currently, milk prices are about where they were last year. The US All Milk price for August was $18 per cwt. Overall, I would expect farm level milk prices to be comparable next year to where they are this year.” Burdine said.
The USDA is forecasting a near two-percent increase in milk production for 2017 and 2018.