Arizona Dairy Pricing Stays Lower Than Other Markets
Milk prices are expected to rise in 2017, helping farmers recover some costs from low 2016 prices. But that may not happen for Arizona’s farmers.
June 2016 was the pricing floor for milk nationwide, and in November, Arizona wholesale prices were among the lowest in the country, which also helped drive consumption higher, according to Jim Dickrell, editor of "Dairy Herd Management" and contributor to AgriTalk.
Arizona is one of the most competitive pricing markets nationwide, and he sees nothing on the horizon in 2017 to ease that.
"In some states, they have minimum pricing laws where you can’t go below a certain cost, but I don’t believe that’s true in Arizona, so they can use milk as a loss leader," Dickrell said.
Pricing pressure in Arizona also comes from competition outside the state. About 15 percent of U.S. dairy is exported to places like Mexico, so as those prices rise and fall, it adds pressure on Arizona dairy producers, Dickrell said.
Nationwide, the 2017 dairy outlook is fairly optimistic from the farmer's perspective, with good demand for cheese and butter and certain segments of milk.
Whole milk and organic milk are up, but low fat and skim milk have waned a bit, Dickrell said.