“If you look at longer run, since 2000, it’s been an average growth rate of about 4% which is a little more than twice as much as the average U.S. growth rate over that period” comments Chris Wolf from Michigan State University. Michigan has had one of the most significant increases in milk production over the past decade. An ag economist says dairy processing is no longer a state issue as production continues to grow in the Upper Midwest and Great Lakes region.
Wolf states in an interview with Brownfield “like Wisconsin and New York with similar climates to Michigan have also been rapidly growing in the past five to ten years compared to previous decades. Long-term, the growth had been happening in the Pacific and the Southwest but recently because of climate, because of water, because of a whole host of other issues, a lot of the growth has been happening in the Upper Midwest and Northeast part of the United States.” Wolf says processing has not been able to keep pace with production and farmers’ milk checks are reflective of added transportation costs as well as generally lower markets as milk has to travel further from the farm to be processed.
While he says the long-term outlook is positive for dairy products with continued growth in the global middle class, but that doesn’t help farmers in the short run when they’re dealing with extremely low prices. Especially when there is more supply in the region than demand/capacity to produce, the prices will go even lower in the short term till supply decreases in relation to processing capacity and demand.