When a person is at the grocery store and they reach for milk, butter, ice cream or other dairy products, I’m not sure they understand what it takes to get those dairy products on the shelves. We’re taking it for granted.
What I do realize from news reports is milk, butter and cheese prices are projected to rise at the grocery store. The good news is there will not be any shortages of dairy products.
As we know, dairy products start with a milk cow. For many years, the genetics of milk cows makes for a great milking machine.
Most dairy cows will never see a bull in their lifetime, as they are bred artificially. Some will be bred to an English breed of bull, such as Angus. Before breeding, the bull’s semen will be sexed and only male semen will be used for artificial insemination. Offspring will be fed out and raised for meat. This practice has really made more income for the dairy business.
There is a shortage now of milk cow replacements. Dairy farmers are keeping their cows for longer instead of selling them. The April Livestock Slaughter Report showed dairy cattle slaughter declining to 207,200 head, the lowest amount since June 2014. Also, there have been 20 consecutive months with lower dairy cattle slaughter than the previous year.
The report said, “As long as the outlook for milk prices improves and beef cattle prices remain high, this trend may continue.”
Dairies are leaving high-development areas like the Front Range of Colorado and moving to more rural areas or farmland such as South Dakota. In the last five years alone, the number of dairy cows has surged 88,000 head, or 69 percent, positioning South Dakota as a national leader in dairy cow inventory growth,
Nationwide, 37 percent of dairies have under 500 cows, 38 percent have between 500 to 2,000 cows and 25 percent have over 2,000 cows.
Of the dairy products, butter is the fastest growing product.
In the middle of May, dairy markets rallied, strongly led by a sharp jump in butter while global milk powder prices declined. Butter jumped to the highest price since January.
Wholesale dairy products are traded just like other commodities. To me this is hard to understand as it is really complex.
Lately, butter on the spot market rose toward the end of May, breaking out of the sideways trading range which extended back to February. Futures followed suit, also reaching three-month highs on talk of tighter cream supplies and strong butter exports.
An issue facing those in the dairy industry today is the diet decline in sugary drinks, salty snacks and fatty foods which would impact dairy rich products like milkshakes and creamy sauces. Data shows consumers are limiting fat, salt and sugar-heavy dairy products.
Dairy farmers are facing ripple effects as reduced demand for high-fat milk could change towards protein-rich outputs over butterfat. Analysts suggest farmland may shift from supporting processed food inputs like sugar for yogurts, to crops which boost milk’s protein yields. Yet, animal proteins, including dairy, face milder disruption than snacks or beverages.
Just remember, it is hard to fool a dairy farmer.
Dennis Sun is the publisher of the Wyoming Livestock Roundup, a weekly agriculture newspaper available online and in print.
