Dairy farmers in Argentina are forecast to slash milk production by 9 percent this year, the largest cutback among the major dairy-exporting nations, says the USDA in a semi-annual report. The Dairy: World Markets and Trade report sees an overall drop in production of 1 percent by the five leading exporters, Argentina, Australia, the European Union, New Zealand and the United States. Compared to estimates at the start of this year, output in New Zealand and the United States will be 2-percent lower, while Australia and Europe are unchanged.
Argentine dairy farmers face the double whammy of unfavorable weather in the early months of the year and adverse economic conditions. “High inflation continues to be a problem which is compounded by limited access to credit,” says the USDA. “In addition, dairy farmers face import controls which limit key inputs such as farm equipment, export restrictions on shipments of dairy products and a drop in global prices of WMP [whole milk powder].”
While the forecast for U.S. milk production is lower than at the start of this year, it still would be larger than in 2014. Output is estimated for 208.8 billion pounds vs 206 billion pounds last year. In its latest WASDE report, the USDA said “higher expected feed prices and weaker milk pices during late 2015 and 2016 are expected to temper the rate of growth in production.”