By Adam Russell
Milk prices remain in a slump even as Texas dairy production and consumer demand continue to rise, according to Texas A&M AgriLife Extension Service experts.
Summertime is typically good for dairy producers as rising temperatures typically translate into higher demand and reduced production going into the dog days of summer. As a result, retail prices for many dairy-based products like ice cream, cheese and butter rise.
However, last year’s price increases for retail products never trickled down to better raw milk prices for producers, said Jennifer Spencer, Ph.D., AgriLife Extension dairy specialist, Stephenville. And while raw milk prices are slowly trending upward this summer, they are still $5 lower per hundredweight than historically high prices in 2022.
Texas dairy producers are getting around $18.50 per hundredweight for raw milk this year compared to $23 per hundredweight for most of 2022, peaking at $25.87 in June and July that year. And prices are $1 per hundredweight lower than summer 2023.
Low milk prices will make it difficult for dairy operations, Spencer said.
“Dairy producers are optimistic with the recent rainfall especially in Central Texas, which translates into better forage production,” she said. “However, drought conditions the past couple of years resulted in low forage supplies, and the benefits of this year’s rain may take a year or so to observe the benefits. Meanwhile, low milk prices will make it difficult for producers to break even, especially if they need to buy forages this year.”
Dairy production shifts with consumers
Consumer demand for dairy products remains strong, said David Anderson, Ph.D., AgriLife Extension economist and professor in the Department of Agricultural Economics, Bryan-College Station.
Per capita consumption of all dairy products grew from 538 pounds per person nationally in 2022 to 655 pounds per person in 2023. But consumption trends continue to shift away from fluid milk to other dairy staples and emerging products.
This demand for products like cheeses that require processing is pushing the industry’s capacity and still impacting dairies regionally. For example, some dairies in Wisconsin – the No. 2 dairy-producing state – had to dump milk in 2023 because there is not enough processing capacity for their output.
In Texas, Spencer said cheese processing plants in Amarillo and Lubbock have added processing capacity for regional dairies while another plant in Abilene is slated to open later this year.
Additional processing capacity will help producers in the Panhandle, where 80% of the state’s dairy production is located.
Anderson said the shift in consumer demand for dairy products has changed the milk market. The rise in demand for products like cheeses, butter and the cheese byproduct – whey – has helped erase the decreases in demand for fluid milk and ice cream.
“It really is striking to look at how our consumption of dairy has evolved,” Anderson said. “The end result is we consume as much or more milk than ever. We just do it in different ways.”
Finding value for dairy products
Annual consumption of fluid milk is down to 130 pounds, or 15 gallons, per person compared to 164 pounds, or 19 gallons, in 2013, Anderson said. Fluid milk consumption has continued to decline since it peaked in the early 1970s, with the average American drinking 247 pounds, nearly 29 gallons, per year.
But as fluid milk consumption declined, demand for cheese climbed. Consumption of American-style cheeses like cheddar and Monterey Jack doubled over the same period, Anderson said. In 2022, the average person consumed 16.2 pounds of these cheeses compared to just over 8 pounds in 1975. Americans also consumed 23.6 pounds of other hard and soft cheese products, including products like cream cheese and cottage cheese.
An array of other products like soft cheeses, Greek yogurt and sour cream have also offset any declines in consumer demand for dairy, Anderson said.
Dining staples like pizza or a loaded baked potato with butter, sour cream and cheese are good examples of how dairy is delivered to consumers, he said.
Newer products like whey are an enormous value-added product for each pound of milk produced, Anderson said. Whey, which was once leftover waste from the process of making cheese, has become a protein-packed ingredient for a range of products from baby formula to pre- and post-workout powders and health bars.
Whey now carries significant weight in the dairy industry, Spencer said.
“Whey has become a big thing,” she said. “I was talking to a cheese plant manager, and he was saying they’re now almost a whey-producing plant, and cheese is the byproduct. They’re getting so much value from it.”
Milk prices challenging producer profitability
Trends may be positive for the industry as a whole, but low milk prices and high input costs have not been good for dairy producers, Spencer said. Input costs like fertilizer and fuel have gone down some but remain relatively high.
Texas continues to see smaller dairy operations close or become part of larger operations, she said. In the past three years, more than 50 dairy operators/operations have either retired, closed or been consolidated. That trend is not just occurring in Texas. Since 2022, around 1,600 dairies have closed nationally.
“It’s been hard for smaller dairies to break even at these low prices, whereas larger dairies have a lower fixed cost per cow, which means more income per cow,” Spencer said.
The Texas dairy herd shrunk some, from 642,000 cows in 2023 to 635,000 cows, and dairy operations are also changing.
Spencer said dairy producers are trending toward introducing beef progeny genetics into their herds to increase the value of calves in other markets. Dairies are also adding technology to reduce labor costs and add efficiency to herd management and the milking process.
“They’re looking for efficiency, different revenue streams and higher prices wherever they can,” she said. “It’s about finding profitability wherever you can with milk prices where they are.”
AgriLife Extension district reporters compiled the following summaries:
Central
The district reported hot and dry conditions in most areas, which allowed producers to begin cutting and harvesting hay. Livestock were reported in good condition districtwide.
Rolling Plains
The hot weather began taking its toll with crop conditions deteriorating for sorghum, corn and cotton crops as well as hay fields. Grasshopper populations were increasing and becoming a concern for producers. The spring rains, however, produced beneficial pasture conditions and valuable growth on hay fields. The wheat harvest has finished with an average annual yield.
Coastal Bend
The district received rain and warm weather throughout the week. The weather made pastures greener and improved soil moisture, which improved crops. Producers reported sorghum was ripening, corn was in the dough stage and drying down, rice was heading out and cotton bolls were emerging. Hay fields were on their second cutting, with good range and pasture conditions. Livestock remained in good to excellent condition and cattle prices ranged from steady to higher.
East
The district received sporadic showers in some areas while most were still dry this past week. The drier weather also began drying out soil moisture, but conditions still were adequate. Hay was still being harvested and was reported to be in good condition. Pasture and rangeland conditions looked good. Livestock conditions ranged from fair to good, but feral hogs were still a problem. Cattle market prices were strong.
Southeast
The district reported hotter temperatures and scattered showers. The weather also helped with forage and hay production for most areas with pastures being cut and grazed, and significant yields were being reported. Sorghum and corn were ready to be harvested. Watermelon harvest was delayed due to late planting. Rice looked good, and the break in the weather the past week helped plants start the flowering stage. Cotton looked good in most areas but needed rain to continue good crop growth. There were no insect pest issues. Range and pasture conditions varied from poor to excellent with soil moisture levels ranging from very short to adequate. Livestock looked good in most areas and cattle prices remained strong.
South Plains
Wheat harvest in the district was ending and yields were above expected levels. Early planted corn was pollinating, and some late-planted crops were still pulling from leftover soil moisture. Producers saw small populations of thrips and some lygus bugs, but there were no concerns at this time. Hay was on its second cutting in most areas while some fields were on their third cutting. New alfalfa was being cut and Bermuda grass was on its second cutting, with both looking good as far as tonnage goes. There were some reports of armyworms, but populations were well below threshold levels. Producers applied herbicides to some crops and dryland cotton was wilting during hot daytime temperatures. Black-eyed peas and pickling cucumbers were beginning to be harvested while potato crops were being dug late in the week. Rangeland conditions were dry. Grasshoppers damaged large areas of rangeland and some crop edges.
Panhandle
The district received scattered showers, but hot and dry conditions quickly dried up any moisture. The wheat harvest continued in some areas, and cotton and feed grains looked good but needed more rain to keep up with growth and development. Overall crop conditions varied from good to fair and soil moisture ranged from very short to adequate. Pasture and range conditions were very poor to fair.
North
A few counties in the district received nearly 1 inch of rainfall, but the hot and dry conditions were drying out topsoil moisture. Soil conditions were reported as adequate to short across most counties. Corn and soybeans did well and were maturing quickly while winter wheat harvest was nearly complete. Some areas reported poor wheat and oat quality. Summer grasses did well, and ryegrass was completely dried down. Pasture weeds and brush matured and were showing signs of drought stress. Range conditions varied from fair to excellent. Livestock were in good condition, and there were no major disease or insect outbreaks reported.
Far West
A storm system in the upper elevations near the Davis Mountains brought much-needed moisture and relief from intense heat to the district. Rainfall accumulations of up to 2 inches were reported in most areas. The 100-degree-plus heat and winds took a toll on irrigated cotton, which was showing signs of drought stress. Early planted fields were blooming with later fields not yet squaring. Corn was badly stressed, but sorghum was reported to be in fair condition. Watermelons and cantaloupes will be harvested in time for the July 4 holiday, and onions were being harvested. Pastures were drying down considerably, and more rain was needed to improve soil, crop and range conditions. Most small livestock were in fair condition, and some were being sold due to little or no grazing. The shipping of late lambs and goats, and culling of ewes and nannies, was ongoing.
West Central
Weather conditions in the district have been hot and dry with temperatures averaging near or over 100 degrees in some areas and only receiving trace amounts of rainfall. Hay production was reported to be good, and producers were finishing the first round of cutting and baling coastal hay and Sudan grass with excellent yields. Forage sorghum was planted and baled with regrowth happening in all areas. Corn harvest was complete, and grain sorghum harvest will begin soon. Grain sorghum crops began to show severe heat and drought stress signs. However, cotton fared well with most already harvested except for the younger crops, which were in a holding phase. Earlier planted cotton looked good despite the hot and dry conditions. Pecans were also in excellent condition. Pasture and range conditions were adequate, but there were reports of pressure from grasshoppers. Livestock and cattle conditions were good, and the market remained strong.
Southwest
The district experienced moderate humidity and 90-degree temperatures with the hot and dry weather decreasing moisture conditions. Sorghum fields were ready for harvest, and corn was still maturing and completing the dough stage, with harvest anticipated to follow soon after sorghum. Hay fields were recovering for a second cutting. Pastures greened up slightly with last week’s rainfall and were in short but fair condition. However, the ongoing heat continues to wear down livestock and pasture. Overall, pasture, range and row crop conditions were from good to excellent. Livestock markets were rising, and early weaning was likely. A few fawns have been spotted alongside their mothers, and bobwhite quail were seen pairing up. Producers were starting to supplement heavily again.
South
The district received varying amounts of rainfall ranging from dry to nearly 6 inches in some areas. Hay in most areas was being cut and baled with some already starting on their second cutting. Corn harvest was beginning or in progress in most areas. Crops were in the denting stage while sorghum was turning color and ready to produce seed. Cotton conditions were good overall, with reports of blooming and boll setting taking place in most areas. Producers were spraying for weeds and insects in some areas. Sunflower and sesame crops were beginning to be ready for harvest and conditions were good. Watermelons were good and were being harvested in some areas. Pasture and rangeland conditions continued to improve, with most areas in good to excellent condition. Livestock and wildlife conditions ranged from fair to good condition with few producers needing to provide supplementation. Cattle conditions were good, and prices remained strong.
Source : tamu.edu