Dairy farmers will likely milk smaller profit from their cows next year
New York’s dairy industry likely won’t see more of the good times next year farmers experienced in 2014, largely because dairy prices and profits are expected to level off.
Andy Novakovic, a professor of agriculture economics at Cornell University, says dairy markets in New York are already starting to decline to be in balance with the rest of the world, "but we have quite a bit of altitude to lose before we get to where the rest of the world is," he said.
This was a great year for the dairy industry, he said.
"The curious thing is, in 2014, we saw the price of milk increase and we saw the price of feed decline," he said. "And that created this wonderful profitability situation."
He adds: "In a way, it was sort of like the price of milk didn’t get the memo. The supply and demand balance was still kind of reacting to the agony of a couple years earlier."
But he predicts milk prices will drop next year to fall in line with the price of corn. "Unfortunately, that condition is rapidly correctly itself and the price of corn is going to stay low, and now the price of milk is going to come down to meet it."
Dairy is the largest aspect of agriculture in upstate New York, one of the state’s biggest industries. It continues to see slow growth in the state, according to Novakovic.
The number of farms is still declining, but the number of cows and their productivity has increased.
Novakovic says consumers, particularly those in the Northeast, are drinking less milk – the most profitable dairy product. Instead, consumption of yogurt and cheese is driving demand.