Could Expansion Be In The Future For The Dairy Industry?
Is there growth potential ahead for U.S. dairy? It’s possible. Shawn Hackett of Hackett Financial Advisors said there are two issues impacting the industry right now.
"We have this wide-spreading avian flu. It's now expanded into California, and we've had buyers get very fearful about future production and have been front-end loaning their purchases well into the future because they're concerned about the future supply. However, the USDA, as of the last production report, said that production grew slightly. So, there's a disconnect between the fear in the market from avian flu and what the USDA was reporting. Are they right, or are we going to see some bigger contractions of supply coming? That's the first thing.”
The other factor influencing expansion may be a lack of dairy heifers.
“If we get the correct price signal, which we're starting to get, can we grow the dairy industry in the U.S. like we've been accustomed to? Right now, what I see is probably one of the tightest, greatest shortages of dairy heifers we've ever seen, meaning that even if the dairyman decides he wants to go out and expand – it doesn't mean he can't - but I don't think we can turn this faucet on as quickly as we've done before. And if China's money-printing bazooka gun we talked about comes to fruition and they start buying milk powder again, which they have for a while, we could have a situation where there's way too much demand and an inability for the U.S. to supply that."
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