With several major dairy processing facilities ready to come onboard in 2024, ripples of possibilities are reaching even into the Midwest. Ryan Yonkman, vice president of Ever.Ag, says while those new processing facilities may be great – filling them with milk may become a challenge.
Ryan Yonkman says distance will still matter when it comes to milk sources closest to these new operations, but as the saying goes: ‘rising water raises all ships’.
“Anytime you can increase competition for milk, that’s a good thing,” he says. “If we think we’ve got new capacity that’s about to outpace our supply curve, that really should be good for everybody. That’s a supply demand equation win if we truly don’t pour on the milk production this year, which as of now, we don’t see that coming.”
Despite higher interest rates, Yonkman says there’s about a half a dozen new processing facilities ready to come online from Kansas to Washington. But that begs the question: where is the milk going to come from?
“What’s the milk production curve going to look like when they’re ready,” he says. “If you try to diagnose that today — not sure where all of this milk is going to come from.”
If you look at the flat milk production in the U.S. and the new dairy processing facilities coming into production next year, it might lead you to be optimistic about dairy. Yonkman says that shouldn’t be the case.
He explains the profitability just isn’t there right now for dairies to increase milk production at a time when available heifer numbers are tight.
“This is a global issue in regard to where you’re going to see major milk production growth in the upcoming year, and so I see headwinds here for the U.S. as well,” he says.