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U.S. Dairy Producers Enjoy Windfall in 2013 on Account of Growing Exports

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Published on : Apr 01, 2014

2013 has been anything but an exciting year for American farmers, with the exception of milk producers in the country. For milk producers in the United States, 2013 has been a windfall year mainly because milk prices soared during the year and feed cost prices saw a decline. At the same time, milk producers are expecting output to touch an all-time high given that there has been a surge in the number of buyers from China and Mexico. 

In the U.S., the average farm is expected to witness a drop of 21% in its net-cash income mainly owing to the decline in wheat, corn, as well as soybean production. On the other hand, dairy farmers are projected to earn 28% more, according to the U.S. Department of Agriculture. 

According to Peter Gutierrez, vice president of the global ingredient sales at the dairy co-operative Agri-Mark Inc, dairy farmers reaping the highest profits they’ve seen in the last several years. 

In Chicago milk futures have risen by 23% and cheddar cheese saw a 19% rise in 2014, and both reached record highs in the March.

However, the higher prices have led to erosion in profit margins for those purchasing domestically. 

The U.S. Department of Agriculture expects that milk output will witness a rise in the fifth consecutive year, achieving a growth of 2.2% to reach 93.1 million metric tons. The share of exports in total sales has grown from 5% a decade ago to 15.5% currently, according to figures provided by the U.S. Dairy Export Council. 

Much of this rising milk consumption is attributed to the growth of the middle class in developing nations from South America to Asia. This has significantly boosted the demand for dairy products such as cheese and other dairy-based processed foods.

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