Economist Phil Plourd shares 2023 insights at Dairy Strong

By Mikayla Peper, communications intern

Among the many track sessions and panel discussions at Dairy Strong 2023, Phil Plourd, president of EverAg Insights, presented “Diagnosis and Direction: Dairy Markets in 2023”. Plourd provided insights into the  many facets of the dairy industry’s future. 

“It’s pretty simple; those who say that dairy is dead are wrong,” Plourd said.  

He described general dairy consumption trends in the United States from the last few decades, high-lighting that consumption per capita continues to rise. When it comes to products playing an important role, the answer is simple. 

“Cheese is the real powerhouse of dairy consumption and will continue to be,” Plourd said. “Retailers know that consumers want cheese and butter and will continue to use that to bring business to their stores.” 

According to Plourd, 2022 will likely be a historic year for farm income from sales. There was less government support, but Plourd is confident overall income for this last year will set records. 

“Dairy farmers have access to better and more risk management tools than ever before,” Plourd explained. 

This means farms can mitigate significant financial risks, creating a greater opportunity for increased income through programs offering real protection for smaller farms. 

When observing critical factors for 2023, Plourd explored a wide range of topics. 

“More money means more milk; it’s as simple as that for farmers in the Midwest,” Plourd said. “It will be more challenging for farmers in California or Idaho, for example, who face base or excess limits.” 

A strain in production could also come from a lower supply of replacement heifers, as seen in recent data.

Keeping an eye on the futures market will be an interesting task, as Plourd suspects that futures will continue to be less than what we saw in 2022. This may bring concern as input costs are anticipated to remain high. 

Consumers will likely be approaching 2023 cautiously, Plourd said. Economic recession has made people uneasy, and it will likely show as the year progresses.

“Recession causes unemployment, not the other way around,” Plourd said. 

He said that an easy tell of what consumers will do is to watch gas prices or, in the case of today’s economy, the food prices. High prices of necessary goods will change how their money is spent. 

Despite certain worries, based on recent dairy consumption trends, Plourd believes we will see the usual seasonal trends of dairy products throughout the calendar year. This includes a decrease in the summer and an increase in the fall. 

“Farmers will really have to watch the margins in early 2023,” said Plourd. “However, milk prices should recover by the middle of the year.”