It's all about the economy at National Dairy Leaders Conference

The dairy economy – surviving the current downturn and preparing for what could be a much different financial environment that follows – dominated discussion at the 2009 National Dairy Leaders Conference April 20 and 21 near Denver, Colo.

An audience of some 200 dairy producers, co-op leaders, regulators, and educators was told that the current crisis is more than just another up-down cycle, due to the global recession that triggered it. As a result, economic forecasters generally see a gradual, subdued rebound rather than a quick snapback.

Terry Barr, chief economist for the National Council of Farmer Cooperatives in Washington, D.C., (pictured here) sees financial recovery beginning this summer and modest gains continuing throughout 2010. He warned, though, that consumers could remain cautious about spending for years, and the acceptable degree of debt and leverage has already changed for everyone, including farmers.

For the long term, however, his outlook for U.S. agriculture is positive. “The fundamental fact to remember is that the world will still be resource challenged, and demand for food will continue to exceed supply,” he said.

Marv Hoekema, a dairy financial consultant from Visalia, Calif., said he already sees signs of recovery in the form of tremendously slowing Commodity Credit Corporation purchases and declining inventories of manufactured dairy products. He sees recovery of cheese prices beginning this summer, driven in large part by declines in production per cow. However, he agrees that recovery will be slow and profitability may not return until 2010. He sees Class III milk prices rising above $15 per hundredweight only occasionally during 2009.