Dairy Industry Update

Although the future is very uncertain, our hope is to keep you updated as much as possible with what we know today.
 
Milk Supply:   I’m sure you have seen the many stories of milk getting dumped across the country as certain processors close their doors or limit production.  So far we are doing OK at our Jerome facility and finding enough sales for cheese to keep the plant running full.  However, with milk getting dumped across the country, finding a home for any surplus milk is extremely difficult and we anticipate extremely weak spot prices for surplus milk until the situation improves.  With overall dairy demand down sharply, maintaining your milk production levels near your “Planned Production” level is very beneficial to the overall situation.   
 
Butterfat:  As mentioned previously, our biggest challenge in Idaho right now is finding a market for the cream that we generate.  I know many of you are working with your nutritionist to find ways to quickly reduce the % butterfat.  We highly encourage those efforts given the lack of a market for cream and the declining butterfat prices.  The current market value of class III butterfat is in the mid 1.30’s as of today.  If the situation on cream does not improve soon, we may be forced to make a further deduction on butterfat.  We will try to avoid that, but we also can’t escape the reality that some of our cream customers have canceled contracts and there not being alternatives.   Again, anything you can do to reduce butterfat will help us all.
 
This is no doubt an extremely challenging time in the dairy industry and we are all feeling that.  We are working extremely hard at our end to adapt to the many challenges and new realities.  We want to be your trusted partner and a long-term market for your milk.  As we navigate through these challenging times, we will do our best to provide you as much information and transparency as possible to help you make the best decisions for your operation.  It has become survival mode in our industry, but we’re confident that if we can endure these challenges together, we’ll be stronger for it and well positioned in the long-term.

Submitted by Hank Hafliger, Class 12