China Milk Thirst Hands U.S. Dairies Record 2014 Profits
By Megan Durisin Apr 1, 2014 1:17 PM ET
In a year when most American farmers can expect lower earnings than in 2013, U.S. milk producers are having a windfall.
Prices have never been higher, feed costs are down, and output is headed for an all-time high as exports surge to buyers from Mexico to China. While the average farm will see a 21 percent drop in net-cash income, led by declines for corn, wheat and soybeans, dairy farmers will earn 28 percent more at $334,100, the U.S. Department of Agriculture predicts.
“Dairy farmers are making the best money they’ve made in many, many years,” said Peter Gutierrez, vice president of global ingredient sales for Agri-Mark Inc., a 1,200-member dairy cooperative in Methuen, Massachusetts, that makes Cabot Creamery cheese and sells about 120 million pounds annually.
Milk futures in Chicago are up 23 percent this year and cheddar cheese gained 19 percent, with both reaching records last month. The higher prices are eroding profit margins for domestic purchases including dairy processor Dean Foods Co. (DF), sandwich chain owner Potbelly Corp., and Annie’s Inc., a maker of organic macaroni and cheese.
While the USDA expects domestic milk output to rise for a fifth straight year, up 2.2 percent to 205.7 billion pounds (93.1 million metric tons), exports now account for 15.5 percent of sales, compared with 5 percent a decade ago, according to the U.S. Dairy Export Council, an industry group based in Arlington, Virginia.
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http://www.bloomberg.com/news/2014-03-31/china-milk-thirst-hands-u-s-dairies-record-2014-profits.html