Springing forward – with optimism
By Darren Turley, executive director
Spring rains always make Texas dairy farmers optimistic about the new year’s crop conditions and hopefully cheaper feed for their herd. Hay and silage have started to be harvested, and corn is in the ground, ready to grow tall with the rain before it is harvested in a few months.
Speaking of optimism, the country is regaining its optimistic outlook as COVID-19 restrictions ease. Texas has moved forward to return to “normal,” thanks to vaccinations and business openings, and the Centers for Disease Control and Prevention has relaxed its guidance on masks.
In addition, restaurants and the food service industry are reopening their indoor dining and expanding their capacity, and customers are feeling more comfortable eating out. This sector represent a large portion of our dairy product sales that are still lagging since the shutdown more than a year ago. An increase in food service sales could boost producer income.
The milk tiered pricing program that hopefully will reduce milk production this spring also should positively impact milk prices. Under the program, dairy farmers are paid less if they produce milk above a specified amount, discouraging the overproduction of milk that would lead to a financial loss.
We’ve seen a reduction of dairy farms in Texas as some dairy farmers took advantage of the price put on their production allotment in the tiered-pricing program and sold out. Production has shifted, but the 340-plus farms in Texas still boosted milk production almost 4% since March 2020.
This may help Texas overtake New York this year to become the fourth ranked dairy producing state in the nation, but this production also needs to find a home. No new processing plants are currently planned. I am often asked by dairy farmers whether any talks are under way to lure a new processing plant to the Panhandle area, where economic development groups are offering land and incentives to lure a plant to their town.
Texas is poised for growth, but it must be profitable growth for dairy farmers. The tiered-pricing program will need to be engaged for several months to impact production across the region enough to change the continued growth that the industry has enjoyed for several years now. When you see the advancements in technology that the industry has embraced, such as genomics and robotics, you can see the future production increases are destined to come.
Another income stream that could increase herd sizes and boost milk production throughout the state are sustainability programs and the sale of methane gas produced by a digestor.
And finally, in March, dairy exports reached a new high when 18.6% of production was exported. This continued increase in exports is expected to climb year over year as foreign markets mature.
All of these factors will impact each dairy farmer’s decisions about the future of their operations, but most importantly it will continue to drive the Texas dairy industry’s growth for years to come.