MARKET ECONOMIC PRINCIPLES HAVE NOT CHANGED

NDPO Info Graphic

COVID 19 has not repealed marketplace supply/demand economics — the virus just made complying therewith very difficult.

Assume milk demand has now decreased by 40% at a time when the milk supply already exceeded profitable demand by 10% (March 2020 milk production for the top 24 states was up 2.4% over the previous year).

Under the assumed facts, marketplace supply/demand economics requires a 50% reduction in the milk supply to be balanced with the reduced demand in order for the marketplace to generate a profitable milk price.

Without significant milk supply reduction, even with significant government action of financial support, a profitable milk price will not be achieved.

The required milk supply reduction WILL be accomplished either by the continued culling of dairy farm families OR the remaining dairy farmers sharing in the culling of some cows and balancing the milk supply with whatever profitable marketplace demand exists or is created going forward.

It is a dairy farmer choice.

Mike Eby
NDPO Board Member