Maintaining focus when everything’s a blur
1. Market volatility and risk
Greenfield said the class III milk price has ranged from $15 to $25 in the last decade. We often operate on the assumption that high feed costs are matched with high milk prices. If that’s true, Greenfield explained, dividing the soybean meal price by the class III milk price should show a flat line over time, but that’s not the case. Greenfield used this point to demonstrate the importance of risk management and government programs, including the Dairy Margin Coverage (DMC) Program, Dairy Revenue Protection (DRP) and Livestock Gross Margin (LGM) Insurance Program.
“Just like everything you do on your farm, risk management is something you need to work at,” Greenfield said.
2. Global industry
More than 15% of the dairy produced in the U.S. is exported, Greenfield reported, and April was a record month for U.S. dairy exports. That was good news for the industry, however, Greenfield cautioned the strength of the U.S. dollar, foreign government instability, shipping and logistics concerns, and international weather can all have big and fast impacts on exports.
3. Consumers (customers)
Greenfield grew up on a dairy farm in eastern Wisconsin and recalls his family having many different options of where they shipped their milk. That’s not the case anymore as competition has decreased, fewer processors have cooperative ownership and, in some areas, farms must first seek permission before expanding their herds. Greenfield pointed out that four of the top five North American processors have European or Canadian ownership.
Further down the value chain, consumers are increasingly interested in sustainability, animal welfare and product traceability – and they’re often heavily influenced by activist organizations, often without knowing who is behind those messages.
Publicly-owned processors and retailers are now also rated on their environmental/sustainability efforts and more, and that information is shared alongside their stock performance, potentially influencing their investors. Greenfield reminded producers these efforts could also drive the policies that govern farming practices.
New dairy management technologies are introduced each day, providing nearly infinite data to each farm. Like all investments on the farm, Greenfield said these technologies are only worthy investments if they benefit the business. And while new technologies can be reliable and efficient tools in the decision-making process, Greenfield reminded that farm owners and managers making good decisions are what drive the success of a dairy business.
Emerging technology is just one of the things Greenfield said makes him feel optimistic about the future of the dairy business. Milk prices are strong as we look to the remainder of 2022 and global dairy consumption continues to rise. This provides great opportunity for American farmers as industry growth in Europe and Oceania is limited.
As governments and industry become more focused on greenhouse gas reduction and carbon sequestration, Greenfield pointed out that American farmers are already providing solutions for other industries and will continue to do so. At the same time, U.S. producers have a long record of improving efficiency and reducing the resources need to grow crops and raise livestock. He said innovation will continue to drive production improvements.
Finally, Greenfield asked dairy producers, “What other industry is so essential for human survival?” and said, “I guarantee you’re doing something that matters.”
Click here to download Greenfield’s PowerPoint presentation from the 2022 Vita Plus Midwest Dairy Conference.
Business and economics
Technology and data management