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Dairy Industry Cautiously Optimistic in a COVID World

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The USDA released its monthly milk production last week, showing that July production is up 1.5 percent from last July. There was also a slight increase from June.

Ken Nobis, senior policy advisor with the Michigan Milk Producers Association (MMPA), said that milk production is bouncing back, but it’s not all good news.

“Any time there’s an increase in milk production under the current situation, it’s a red flag,” he said.

Financial struggles are no stranger to the dairy industry. Nobis was expecting a better 2020 than producers saw the last five years. The biggest change for dairy in a COVID world is patterns of consumption.

“There’s approximately 7.3 billion meals served through the school lunch and school breakfast program annually, and most of those meals include a half pint of milk,” said Nobis. “When the schools closed last spring, there was a significant drop in usage of dairy products. Some of that was picked up by greater purchases in home.”

The dairy industry wasn’t made whole from USDA’s Market Facilitation Program payments last year. Nobis said the Coronavirus Food Assistance Program (CFAP) has been more beneficial to producers.

“Right now, the CFAP payments has come closer to making this whole than what the trade mitigation did by far,” said Nobis. “When we received those payments, I think everybody probably had a sigh of relief—I know we did on our farm.”

Nobis is concerned about the carryover effect in 2021 and isn’t sure how many more funds the government will be able to issue. Nobis is bullish dairy, but he is cautious.

“It’s still going to be a very volatile market so you really don’t know what to expect.”