|
UP / Thumb of Michigan | A good friend of mine graduated from Michigan State with an ag econ degree. He went on to be the President of the Michigan Farm Bureau for many years.
He was asked to address some people on the future of ag in general for a large group during his tenure. Not necessarily about dairy, but that's where the questioning led.
He wasn't there at this meeting to advise, just predict.
He was posed a question from a moderator. "What will the dairy farms do if milk prices continue to decline" His response in a nutshell was that due to things like high fixed costs, the dairyman was going to have to add cows or leave the business. Some dairies had higher fixed costs than others, so expansion was really the only option. Spread the fixed costs over more production by producing more milk.
Ok, so that led to the next question. "What will dairies do if milk prices rebound" His response was
that due to lower milk prices in the past, dairies were going to add cows to capitalize on the greater income potential of producing additional milk. Might even see not only some cows added, but also additional barns . Spread the management of the dairy out over more animals.
Room gets quiet. Wait a minute says the moderator.
You said that dairies would expand if milk prices stay low. Yes my friend responds.
But then you said that dairies would expand with higher milk prices. Yes he responds.
But thats the same outcome! You're predicting that dairies will expand no matter what the price of milk is!
Yep he said.
You now know everything about dairies you really need to know.
This was probably 30 years ago. And it could have been 130 years ago. The trend would have been pretty similar. My friend was certainly correct from his speech till today.
Many people would like things to be the same as when Grandad farmed. I know I would. Its just not a realistic thing to expect to return to, however. | |
|
Noise on the Facebook
