Milk prices in the US took a tumble in 2023, causing concern among dairy farmers as input costs soared. However, there is hope on the horizon as experts predict a rebound in milk prices and increased profitability due to innovative strategies in feeding and breeding.
But what does the dairy industry look like for our friends up north in Canada? Let’s take a closer look at the dairy outlook for 2024 in Canada.
## The Canadian Dairy Outlook
Graeme Crosbie, a senior economist at Farm Credit Canada, is optimistic about the dairy industry in Canada for the coming year. Higher demand from processors and low butter stocks are paving the way for increased milk production by Canadian dairy farmers.
In addition to these promising signs, strong prices for culled cows and calves, along with stabilising input costs, are expected to contribute to better average gross margins for 2024 compared to previous years.
### Gross Margins in Canada
Farm Credit Canada’s estimates of average gross dairy margins in Canada for the years 2019-2024 show a positive trend. The calculations exclude fixed costs and return to management, focusing solely on total revenue less total variable costs, including feed.
It is important to note that the Western Milk Pool (WMP) in Canada recently increased milk quota to balance production across the 4 western Canadian provinces. This move aims to ensure a fair distribution of quota in the supply-managed milk production system. However, no quota increases have been announced for eastern Canada at this time.
A 1.8% farm gate milk price increase is set to take effect on 1 May 2024, further boosting farm cash receipts and profitability for dairy farmers in Canada this year.
## Factors to Monitor in 2024
While the outlook for Canadian dairy farmers appears positive, there are key factors that industry players should keep an eye on throughout the year. Feed prices and availability, butter stocks, retail demand for dairy products, inflation, interest rates, and growing conditions in the Prairies will all play a significant role in determining profitability in 2024.
Feed availability and pricing, in particular, will be critical for the financial success of Canadian dairy farmers this year. Crosbie emphasises the importance of monitoring these factors closely to ensure sustainable profitability in the industry.
### Feed Cost Forecast
According to Farm Credit Canada, feed costs in Canada are expected to ease for dairy farmers in 2024. This positive forecast bodes well for the financial health of dairy operations across the country.
As dairy farmers in both the US and Canada navigate the challenges and opportunities that 2024 presents, it is crucial to remain vigilant and adaptable in response to changing market conditions and external factors.
In conclusion, while the dairy industry faces uncertainties and risks in the year ahead, there are also promising developments and opportunities for growth and profitability. By staying informed, proactive, and resourceful, dairy farmers in both the US and Canada can position themselves for success in 2024 and beyond.
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