Milk prices remain in a slump even as Texas dairy production and consumer demand continue to rise, according to Texas A&M AgriLife Extension Service experts.
Summertime is typically good for dairy producers as rising temperatures typically translate into higher demand and reduced production going into the dog days of summer. As a result, retail prices for many dairybased products like ice cream, cheese and butter rise.
However, last year’s price increases for retail products never trickled down to better raw milk prices for producers, said Jennifer Spencer, Ph.D., AgriLife Extension dairy specialist, Stephenville. And while raw milk prices are slowly trending upward this summer, they are still $5 lower per hundredweight than historically high prices in 2022.
Texas dairy producers are getting around $18.50 per hundredweight for raw milk this year compared to $23 per hundredweight for most of 2022, peaking at $25.87 in June and July that year. And prices are $1 per hundredweight lower than summer 2023.
Low milk prices will make it difficult for dairy operations, Spencer said.
“Dairy producers are optimistic with the recent rainfall especially in Central Texas, which translates into better forage production,” she said. “However, drought conditions the past couple of years resulted in low forage supplies, and the benefits of this year’s rain may take a year or so to observe the benefits. Meanwhile, low milk prices will make it difficult for producers to break even, especially if they need to buy forages this year.”
Consumer demand for dairy products remains strong, said David Anderson, Ph.D., AgriLife Extension economist and professor in the Department of Agricultural Economics, Bryan-College Station.
Per capita consumption of all dairy products grew from 538 pounds per person nationally in 2022 to 655 pounds per person in 2023. But consumption trends continue to shift away from fluid milk to other dairy staples and emerging products.
This demand for products like cheeses that require processing is pushing the industry’s capacity and still impacting dairies regionally. For example, some dairies in Wisconsin – the No. 2 dairy-producing state – had to dump milk in 2023 because there is not enough processing capacity for their output.
In Texas, Spencer said cheese processing plants in Amarillo and Lubbock have added processing capacity for regional dairies while another plant in Abilene is slated to open later this year.
Additional processing capacity will help producers in the Panhandle, where 80% of the state’s dairy production is located.