As the industry grapples with fluctuating commodity prices, evolving regulatory landscapes, and the pressing need for sustainability, dairy farmers and processors are battling with the need to prioritize strategic imperatives across their operations. Erica Maedke, Vice President of Insights at Ever.Ag, sheds light on the intricate relationship between macroeconomic trends and industry-specific dynamics, providing stakeholders with a strategic framework to align their operations with evolving market forces.
Maedke’s observations for the coming year underscore the critical balance between innovation and tradition in the dairy sector. Her outlook is shaped by an understanding of both the immediate pressures — such as labor shortages and global trade tensions — and the longer-term shifts toward sustainability and digitalization.
From forecasting dairy commodity prices and assessing the impact of the Trump administration’s policies to exploring advancements in artificial intelligence and environmental stewardship, Maedke’s insights are vital for positioning the dairy industry for sustained growth. Her insights serve as a call to action for dairy leaders to embrace change, enhance operational efficiencies, and leverage emerging technologies to maintain a competitive edge in an increasingly complex global market. Dive into the full article to explore the comprehensive insights and strategies from Erica Maedke and other industry thought leaders who are shaping the future of the dairy industry.
U.S. Dairy Prices Outlook
“The team here at Ever.Ag has a bearish view of the year ahead relative to current futures prices. The root causes: (1) expanded cheese capacity and (2) lots of fat around. With many new plants in the early phases of startup, the tidal wave of cheese is just beginning. We believe the milk solids will be there to allow full production — whether from local raw milk or distant condensed milk. And while Class III may pull milk away from balancing plants, we don’t see a big pop in butter prices on the horizon. Fat off the farm and the resulting butter in storage should be more than adequate.”
Impact of the Incoming Administration
“With roughly 16% of U.S. milk solids moving for export, international markets are essential. Dairy producers and manufacturers are rightfully concerned about tariffs and retaliation from our largest trading partners (Mexico, Canada and China). World leaders are taking President-elect Donald Trump at his word and reaching out to negotiate already, so I’m hopeful for a quick resolution.”
“As for food policy, Trump’s Cabinet-level picks bring diverse views to the table. Robert F. Kennedy Jr. and the ‘MAHA’ (Make America Healthy Again) movement advocate for less chemicals, more organic foods, raw milk and other ideas that increase the cost of food. Brooke Rollins’ views on agriculture policy are less publicized, so I’m curious to see if her conservative leanings send her towards cuts in government spending (i.e. farm programs) or cheap food as national security. Either way, get out your popcorn because the show is about to begin.”
Five-Year Farm Bill
“With Republican control of Congress and the White House, I’m optimistic that new legislation will get passed. In 2024, the House Ag Committee moved a bill forward, so the new Congress isn’t starting from scratch. But there are new players and new power dynamics that will likely result in a few adjustments. With Robert F. Kennedy Jr. as Secretary of HHS, the strength of the MAHA movement is a wild card in the food policy debate. Brooke Rollins as USDA secretary is also an unknown in the agriculture policy space. With neither having run Cabinet agencies before, I’m curious to see which one will be more effective in driving change, and if either can materially influence new legislation coming from Capitol Hill.”
Federal Milk Marketing Orders
“USDA’s task was to balance the competing interests at stake with the FMMO reform process. Dairy producers — those with the vote — will get more money. Processors will get a few carrots, namely improved make allowances. Consumers — the losers in this proposal — will pay another dime or so for a gallon of milk, which is likely to result in a minor cut to demand.”
“The only structural change to the formulas is the removal of barrel cheese from the Class III milk price formula. I believe this has the potential to disrupt the private market. With raw milk costs (based on blocks) disconnected from the finished product price (based on barrels), regulated barrel manufacturers face far greater risk than before. How they handle this mismatch may very well determine the fate of their business.”
Opportunities in Dairy Products
“Generally speaking, consumers want convenience, and they want protein. Where dairy intersects with these trends is where I see opportunity. With expansions in aseptic beverage capacity, I am hopeful there’s finally enough line time to grow and innovate in that space. The pipeline of whey protein ideas is rocking, but many may stall due to the extremely high WPC 80/WPI prices. After new cheese capacity gets going and adds whey solids to the market, prices may come down to a level where these new products can meet company profitability thresholds for launch.”
Environmental Stewardship Goals
“My understanding is that the industry is making incremental progress towards reaching its sustainability goals. My colleague, Matt Gould, says about 4% of U.S. dairy farms meet 2030 goals. Viewed optimistically, that’s great progress five years ahead of schedule. A little more pessimistic take: the low-hanging fruit is already picked, and it’s only going to get harder. The biggest challenge I see is the conflict between less support from the federal government under Trump’s leadership but firm deadlines for compliance imposed by California and the European Union. Do companies have the long-term vision to keep pushing forward, or do they slow their efforts to achieve short-term profits?”
Artificial Intelligence in Dairy
“AI often changes the nature of work. Ever.Ag’s clients are seeing tremendous benefits from implementing our AI technology. Our Maternity Warden tool monitors cows near calving and calls for help when it’s needed. Simple but mundane work, now done by computers. We’re seeing lower stillbirth rates and fewer incidents of dystocia, all good things for animal health and farm profitability. I wish I had Ever.Ag’s Cheese Yield Optimization tool when I worked at the cheese plant. (More vats missed spec than I’d like to admit.) So the prospect of 1%-3% improvement in margin is huge for the bottom line in a commodity business with razor-thin margins.”
Key Issues for 2025
“Labor remains a problem, both for dairies and manufacturers. Demographics indicate that Baby Boomers will keep retiring. Their decades of experience and knowledge is valuable, resulting in a big loss when they leave, especially if a business isn’t adequately prepared. Who replaces them and at what cost?”
“Another concern: The incoming administration is preparing for mass deportations of undocumented workers. While it’s not clear how everything will shake out, and if farms will be left without the evening’s milking crew after an ICE raid, fewer workers means higher labor costs.”
Erica Maedke
Vice President of Ever.Ag Insights
Erica has roamed from the halls of the US Senate to the floor of a Wisconsin cheese plant. Before joining the Ever.Ag team, she held positions with then Senator Hillary Clinton, Kraft Foods, Foremost Farms, Land O’Lakes and Winona Foods.