Friday, March 19, 2021
CapitalPress.com 9
Dairy/Livestock
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Dairy picture clearer but
volatility will continue
National Milk backs
labor reform legislation
By CAROL RYAN DUMAS
Capital Press
By CAROL RYAN DUMAS
Capital Press
Tighter global milk sup-
plies, growing economies, a
slow return to familiar con-
sumer patterns and reso-
lution of shipping disrup-
tions are all positive factors
for dairy markets moving
through the year.
The view of the future
for dairy markets is “clearer
and more hopeful than it has
been for months,” analysts at
Rabobank said in their latest
“Dairy Quarterly” report.
Rabobank is forecast-
ing a 1.1% increase in milk
production in the Big 7
dairy-producing regions in
2021, a decrease compared
to the 1.6% year-over-year
growth in 2020. It’s also
forecasting a 4.5% year-
over-year increase in global
GDP, compared to a 3.8%
decrease in 2020.
In the U.S., milk produc-
tion increased 2.8% year
over year in the fourth quar-
ter of 2020 but slowed to a
1.6% increase in the fi rst
quarter of 2021.
The elevated milk sup-
ply late last year might have
jumped the gun as consumer
activity remained relatively
subdued over the winter, the
analysts said.
“But moving into the sec-
ond half of 2021, we should
see consumers shift into
post-vaccine consumption
patterns that boost demand,”
they said.
Higher feed costs will
pressure producers’ margins,
with corn and soybean prices
remaining elevated at least
until the new crop comes in
September.
“However, with risk-man-
agement programs, govern-
National Milk Produc-
ers Federation is pushing
hard to build bipartisan
support for the Farm Work-
force Modernization Act,
which was reintroduced in
the U.S. House.
The bill passed the
House in 2019 but was
stopped cold in the Sen-
ate by the COVID-19 pan-
demic when non-pan-
demic legislation was put
to the side, Claudia Lar-
son,
National
Milk’s
senior director of govern-
ment aff airs, said during
the latest “Dairy Defi ned’
podcast.
Circumstances are dif-
ferent now than they were
in 2019, with a couple of
factors that could work in
the bill’s favor, she said.
“We are in the middle
of COVID, and we have
seen COVID actually exac-
erbate the labor crisis that
agriculture was already
facing,” she said.
There are fewer domes-
tic workers available to be
referred to farms, so the
labor crisis has been inten-
sifi ed, she said.
“So it’s especially sig-
nifi cant now because
there does seem to be an
increased sense of urgency
and need to address the cri-
sis on American farms,”
she said.
There is also a general
sense of an appetite for
immigration reform more
Matthew Weaver/Capital Press File
Analysts expect less volatility in dairy markets this year
compared to 2020.
MILK PRICE
FORECAST
Class III
Q1 2021 — $16.08
Q2 2021 — $17.57
Q3 2021 — $17.70
Q4 2021 — $17.76
Q1 2022 — $17.09
Q1 2022 — $17.71
Class IV
Q1 2021 — $13.64
Q2 2021 — $14.86
Q3 2021 — $15.71
Q4 2021 — $16.12
Q1 2022 — $16.08
Q1 2022 — $16.62
Source: Rabobank
ment aid and relatively high
milk prices in 2020, produc-
ers are entering this year in a
strong enough position to be
able to withstand these pres-
sures,” the analysts said.
On the stocks side, cheese
inventories were up 3.3% at
the end of the year, which
should be no challenge to
work through. Butter inven-
tories, however, remain 33%
above a year ago.
“As dairy production
begins to refi ll the food-
service supply chains, we
expect less surplus milk to
head to butter churns, result-
ing in the eventual draw-
down in butter stocks. Like-
wise, a market surprise to the
upside exists for the butterfat
market if the timing of the
recovery occurs during the
seasonal low period (third
quarter) of butterfat produc-
tion,” the analysts said.
Whey and nonfat dry milk
have done well, but exports
are currently challenged by
container availability. But
whey demand from China
remains strong, and the ship-
ping challenges should be
resolved by the end of the
second quarter, they said.
U.S. dairy exports in
2020 were up 12% year over
year, with strong increases
to China, Indonesia and the
Philippines — up 81%, 41%
and 34%, respectively.
“We can expect less dra-
matic gains in 2021 against
strong 2020 results, but
trade should continue to be
robust,” the analysts said.
U.S. Capitol
broadly. President Biden
put forth his proposal,
both the Senate and House
have taken up immigration
reform as something they
want addressed in a serious
and meaningful way and
diff erent groups are more
interested in reforming dif-
ferent parts of the immigra-
tion system, she said.
“That general broader
appetite for immigration
reform wasn’t as, sort of,
pervasive in 2019 as it is
now,” she said.
The reform that was
passed in the House in 2019
was a bipartisan process
with bipartisan support,
and the current bill has the
potential to be picked up
and included in the broader
immigration reform discus-
sions, she said.
“We have this potential
for a bipartisan ag labor
reform bill to move through
the House, make it over to
the Senate and really seize
this window of opportu-
nity that is being presented
in the current reality of a
broader appetite for immi-
gration reform,” she said.
The bill doesn’t have
universal support in the
agriculture community, but
it does address dairy’s two
broad, general needs — the
protection of current work-
ers and meaningful access
to guest workers through
the H-2A visa program, she
said.
“It is not a perfect bill,
no piece of legislation is
going to be perfect. But by
addressing the needs in a
way that would be work-
able for dairy, it is a vehi-
cle that we feel like we can
support in moving it for-
ward through the process
so that additional improve-
ments can be made,” she
said.
If the bill sits stag-
nant, the industry loses the
opportunity for continued
discussions on fi nding an
actual solution, she said.
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