Mike North of Ever.Ag said there are several factors limiting expansion for dairy farmers currently.
“Obviously, feed costs and overall input costs and you can throw labor in there and the whole kit and caboodle,” North said. “That, ultimately, is keeping people from expanding because they don’t want to walk into a major capital expenditure and then have the floor drop out from underneath them with a high-cost structure. Nationally, we still have a quota system that is maintaining a presence in different geographies also keeping people from expanding. And then lastly, let’s say you’re not held by either of those concerns, where are you going to find someone to build you a new free stall barn or a new parlor, and then what are you going to have to pay in terms of building materials to get that done? It’s really cost prohibitive to think about expansion right now from that front, too.”
North said there’s been a general suppression on production growth across the country because of those reasons, but the future should see those issues flatten out.
“It’s not necessarily good or bad- it’s just where we find ourselves right now,” North said. “In my 28 years, there’s never been a time when we’ve seen this kind of a setup where we’re dealing with massive supply chain issues, which are starting to resolve themselves, together with a macroeconomic picture that’s cloudy at best, and maybe scary, at worst, together with all sorts of geopolitical crosswinds when it comes to global trade. And at the same time, this really high cost of production. And I think as a byproduct, there’s so much noise, most people are just saying I’m going to sit still for now, and I think that’s okay.”
North made those comments during last week’s World Dairy Expo in Madison, Wisconsin. For more on Ever.Ag, visit their website simply at ever.ag.
