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Low milk prices will last longer with larger farms

A new report from CoBank suggests the shift to larger dairy farms could lead to longer periods of lower prices.

Senior dairy economist Ben Laine tells Brownfield the dairy markets have traditionally followed three-year price cycles, however, since 2014, that hasn’t been the case.  “As a way to survive those price cycles, dairy farms got bigger and consolidated.  As a result, because those large farms are driving the production right now, they’re less responsive to these price changes.”

He says at least 50 percent of dairy farms today milk 1,000 cows in the U.S.  “It’s more sustainable and more profitable even in these difficult times.”

Laine says there is room for both large and small farms, but they’re competing in different markets.  “The large farms are going to be good at producing lots of commodity milk.  I think the smaller farms have an advantage of being closer to the consumer and being a little more agile and able to look at organic of locally marketed premium milk.”

He says markets are expected to recover some in 2019, but retaliatory tariffs still in place limit the upside.

AUDIO: Interview with Ben Laine