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Dairy Facts 2016
 
 

Economists Say Industry Needs New Tools to Navigate Changing Economy

Jan 24, 2018
John Newton, Ph.D., Director of Market Intelligence, American Farm Bureau Federation

A panel of economic experts convened at Dairy Forum to explore the opportunities and challenges for the dairy industry at home and abroad and discuss the tools dairy leaders need to navigate today’s marketplace. John Newton, Ph.D., director of market intelligence at the American Farm Bureau Federation, and Tom Bailey, executive director of dairy research at Rabobank, offered a cautiously optimistic outlook for dairy in the coming years.                                                                                                            

Dave Carlin, IDFA senior vice president for legislative affairs and economic policy, moderated the panel.

Domestic Market

Newton said the joint farm bill proposal on risk management tools for fluid milk proposed by IDFA and the National Milk Producers Federation would provide opportunities for the dairy industry to better navigate the market. He noted that the proposal would make milk more competitive in the beverage case by allowing futures contracts for fluid milk. He also stated that the proposal would have added $50 million to the Federal Milk Marketing Order pool had it been in place since 2000.

Newton also provided an overview of the economic forces at work in the U.S. market. He outlined many reasons for the decline in the farm value of milk by $15 billion since 2014, pointing out the increasing number of options in today's beverage case, as well as changing consumer preferences and regional disparities in milk production and processing. He also discussed the merits of reevaluating today’s milk marketing regulations to keep pace with the marketplace evolution.

Global Marketplace

Tom Bailey explored the driving forces in international dairy markets, namely a glut of milk and corresponding falling milk prices, that are expected to present the industry with lower demand, with the exception of China.

Bailey was optimistic, projecting a global economy on the cusp of an uptick in growth, but he cautioned that this growth could be derailed if the United States opted to withdraw from the North American Free Trade Agreement.

For more information, contact Carlin at dcarlin@idfa.org.

 
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