Dairy Market Situation and Outlook Dairy Management Workshop

Dairy Market Situation and Outlook Dairy Management Workshop Minnesota Milk Producers Assoc. February 16, 2018 Dr. Marin Bozic

2 18% 11 500 16% 14% 12% 10 500 10% 8% 6% 9 500 4% 2% 8 500 1985 1990 1995 Average number of milk cows in the U. S. 2000 2005 2010 2015 0% U. S. Dairy Exports as % of U. S. Milk Solids Thousands Dairy Herd Size Stabilized when Exports Took Off

But Now Exports Stabilized… 3

Whole Milk, Nut Juices on the Rise Source: Dr. John Newton, AFBF 4

Milk Production: 2017 Growth Rates 5

6 28, 5 28, 0 27, 5 27, 0 26, 5 26, 0 25, 5 25, 0 24, 5 24, 0 23, 5 23, 0 22, 5 22, 0 21, 5 21, 0 20, 5 20, 0 20072008200920102011201220132014201520162017 Minnesota Daily Milk Production 5 500 5 250 5 000 4 750 4 500 4 250 4 000 3 750 3 500 3 250 3 000 2 750 2 500 Minnesota Dairy Farm Count MN Daily Milk Production (mil lbs) Consolidation Will Pick up Pace

Policy Developments Farm Bill Title I Program – Margin Protection Program for Dairy Producers - Reformed in February 2019 to reduce premiums for small producers (up to 200 cows) by 70% - Milk finally getting crop insurance programs: - Livestock Gross Margin for Dairy Cattle – no longer a pilot program - Dairy Revenue Protection – new area revenue insurance, currently under development - NAFTA: Losing market access to Mexico would be a major blow to U. S. dairy sector 7