By Chandler Hansen, Special to NEAFA
Dr. Chris Wolf. Dr. Wolf, a professor of Agricultural Management and Policy at Cornell University’s Dyson School of Applied Economics and Management, gave the first presentation at the NEAFA Forum, updating members on the current state of the Northeast Dairy Economy.
Since no industry exists in a vacuum, Dr. Wolf began his presentation by giving an update on the U.S. economy. “The main story in the U.S. economy right now is inflation,” said Wolf. “Inflation is at the highest level it has been at in 40 years. As of April of 2022, inflation is around 8.3 percent, and farmers, like people in other industries and everyday Americans, have been feeling the effects of that high inflation.”
Another area that Wolf focused on was unemployment. “As of May of 2022, the unemployment rate is at 3.6%,” said Wolf. “About 390,000 jobs were added in the U.S. in May. Rural areas however are still experiencing problems finding workers for jobs.”
According to Wolf, there are two factors that will determine crop prices for the U.S. this year: weather and the war in Ukraine. In speaking about the dairy industry, prices are up in general. “Prices for dairy rations have increased, and so have the prices for milk,” said Wolf. “Class III milk price increased to $25.00, Class IV milk is slightly down but around $25.00, and all milk prices are around $27.00 which is up from around $18.50 the same time last year. Right now states in the East are short on cream, which is effecting the availability and price of some dairy products. This is something some of you have maybe seen at the grocery store lately. There have been a few times that I have been at the store and there's no cream so then I'm calling my wife asking if something else will work for the recipe. While cheese prices have been decreasing lately, butter prices have seen a large increase because of this shortage. Consumers are also rediscovering full fat dairy products, which is something that could effect markets for certain dairy products going forward.”
Wolf also looked at how the U.S. milk market compared with those throughout the rest of the world. “Compared to other world milk markets, the U.S. has markedly higher prices than both the European Union and New Zealand milk prices,” said Wolf. “The U.S. remains an important exporter in world dairy markets with monthly export volumes for 2022 remaining nearly identical to 2021 so far.”
In terms of milk production, Dr. Wolf shared that the Northeast is not seeing much change. “Compared to last year, states like Pennsylvania and Vermont are seeing around a one percent decrease in production, while New York has seen no change from the previous year,” said Wolf. “Other areas of the country have seen larger changes. California is seeing an almost two percent decrease and some areas in the Southwest experiencing decreases of ten percent due to drought. These operations seem to be moving to places further east, such as Texas, which has seen an almost six percent increase in production. Overall U.S. production is slightly lower than it was this time last year, but still higher than 2019 and 2020 levels.”
Looking ahead, Dr. Wolf predicted that milk prices will steadily decrease throughout the second half of the year, but remain higher than last year’s prices.