Beef-on-dairy, protein push to influence supply, demand

Justin Benavidez, chief economist for the U.S. Department of Agriculture, who has been on the job for a matter of weeks, oversaw the agriculture department’s annual outlook conference. During his presentation, Benavidez outlined the outlook for many commodities, including milk prices; “We have the highest number of dairy cows in many decades, with almost 9.6 million dairy cows.” The beef-on-dairy influence resulted in a higher-value dairy calf, leading dairy producers to hold cows for a longer period. The larger milk supply drives prices lower. Consumer buying habits have also changed. “We have a huge trend toward protein density products; we have the GLP-1 influence, which is totally going to be a factor going forward on total food consumption.” The USDA economist said the federal support will only increase this year; “Direct government payments here in 2026 are forecast at roughly $44 billion or 25% of net cash farm income.”

Class III prices expected to drop further

At the USDA Ag Outlook Forum, Class III milk prices are forecast to average $16.65 per hundredweight this year; that’s down from $18 in 2025. Feed prices are favorable, but dairy cow numbers are projected to increase. The number of dairy heifers available for replacement was the lowest on record since 1990, and the number of first-calf dairy heifers was the lowest since 2019, when this estimate was first recorded.

Thompson unveils farm bill text

Saying it is long overdue, House Agriculture Committee Chairman Glenn “GT” Thompson has released the farm bill text. The 800-page bill expands on the support for farmers in the One Big Beautiful Bill. It more than doubles the investment in export promotion, including the Market Access Program and Foreign Market Development program; updates payment limits for guaranteed operating and ownership loans; and maintains the Dairy Business Innovation Initiatives. The farm bill text also addresses dairy risk management tools. It directs dairy production expenses to be reported to ensure producer costs are accurately reflected in the data. It also provides certainty for dairy farmers and dairy cooperatives by allowing the Dairy Forward Pricing Program to continue in perpetuity.

Prop 12, Q3 solution included in farm bill proposal

Controversial state policies, such as California’s Prop 12 and Massachusetts Q3, are addressed in the House Agriculture Committee’s new farm bill text. It says state and local governments cannot impose regulations on how livestock is produced outside of its borders, protecting farmers and ranchers from dealing with a patchwork of state-by-state laws. The reaction was quick from supporters and detractors. The National Pork Producers Council praised Chairman Thompson, saying it brings them one step closer to regulatory certainty. A coalition led by the American Society for the Prevention of Cruelty to Animals, Farm Action Fund and Food & Water Watch says the farm bill text tramples on states’ rights and takes market opportunities from independent hog farmers.

Milk production up in February supply, demand report

In the latest USDA World Agricultural Supply and Demand Estimates report, 2026 milk production totaled 234.5 billion pounds. That’s up 3 billion pounds from 2025. Butter and cheese are expected to remain competitive on the international market, pushing dairy exports higher on a fat basis. On a skim-solid basis, exports continued their decline with lower casein and lactose exports. The all-milk price forecast for 2026 increased 70 cents per hundredweight from its prior report at $18.95 per cwt. Class III and Class IV price forecasts also increased.

Near record dairy exports

The U.S. dairy industry exported $9.5 billion in dairy products this past year, approaching the record highs in 2022. Export sales are up 15% over 2024 levels. “This near-record year demonstrates that U.S. dairy exporters are succeeding in diversifying both markets and product portfolios,” said Michael Dykes, president and CEO, International Dairy Foods Association. “Looking ahead, our industry is poised for even greater growth.” The higher-fat dairy products saw the most growth, with export volumes for butter and milk fat up 165%.

USMCA reviewed in Senate Finance Committee

Agriculture was part of a Senate Finance Committee hearing on the U.S.-Mexico-Canada Agreement. Idaho dairy farmer Ted Vander Schaaf said Mexico and Canada are the top two export markets for U.S. dairy products. When pressed, Vander Schaaf said the dairy industry would like to see Canada change its approach to tariff rate quotas. “It seems that they will hand them out to people who can’t use them; therefore, our exports never get exported because nobody is requesting them,” Vander Schaaf said. “We need modification of language so it is fully utilized.” USMCA comes up for a formal review this summer. The Trump administration is considering the negotiation of bilateral trade deals with Canada and Mexico, rather than the current trilateral agreement. A coalition of more than 40 agricultural groups has been lobbying Congress and the administration about the importance of the USMCA.

Dairy groups push for USMCA

Forty groups, including dairy organizations, are part of the Agricultural Coalition for the USMCA, up for review this year. The National Milk Producers Federation and U.S. Dairy Export Council executive vice president for trade policy and global affairs, Shawna Morris, said USMCA is vitally important. “We urge the president to renew the agreement with targeted changes that will make it even more robust and helpful to farmers.”

House rejects Trump tariffs on Canada

In a largely symbolic vote, the House narrowly passed a resolution of disapproval regarding the President’s ability to impose tariffs on Canada. Six Republicans joined the Democrats in rejecting the Trump tariffs. House Speaker Mike Johnson tried to block the vote from happening and was disappointed in the outcome. “The president has veto power, and there’s not a two-thirds majority in both chambers to override the veto, so it’s not going to change the policy anyway,” Johnson said. “I think this is a fruitless exercise and a pointless one.” After the vote, House Agriculture Committee Ranking Member Angie Craig issued a statement. It said, “Trump’s trade war with Canada is crushing our family farmers and working people.” And this vote was an opportunity to stabilize the U.S. trade relationship with Canada.

Beef, dairy groups react differently to Argentine trade news

The Trump administration’s decision to import Argentine beef is being criticized by the National Cattlemen’s Beef Association, R-CALF USA and U.S. Cattlemen’s Association. However, the U.S. dairy industry is praising the new reciprocal trade agreement. Argentina has agreed to eliminate tariffs on selected dairy products, including milk powder and dairy protein. In addition, Argentina agreed to address non-tariff trade barriers. The NMPF and USDEC said they will continue to work with the administration to increase market access.

Klobuchar highlights ag challenges at state departments conference

Senate Agriculture Committee Ranking Member Amy Klobuchar called for stability in trade policy, renewed investment in USDA programs and swift action on a bipartisan farm bill while addressing the National Association of State Departments of Agriculture Winter Policy Conference in Washington, D.C. The Minnesota lawmaker criticized ongoing tariff uncertainty, saying, “I am not a fan of the chaos in the commodity markets and the ups and downs and the drying up of markets due to these tariffs. Tariffs have made our crops less competitive in international markets while making the cost of inputs like fertilizer and equipment more expensive.” She added that farmers are being forced to make major decisions “when the rules change by the week or even sometimes by the day.”

Section 32 purchases to be made to support U.S. farmers

USDA has announced plans to purchase up to $263 million in ag products to distribute to food banks and nutrition assistance programs. Dairy products are a big part of this announcement. Section 32 purchases include $75 million in butter, $42.5 million for cheese, $20.5 million for fresh fluid milk and $10 million for ultra-high temperature milk.

A new role for Herrick

As of March 15, Matt Herrick takes over as president and CEO of the International Bottled Water Association. He currently serves as the executive vice president and chief impact officer for the International Dairy Foods Association. Previously, Herrick was in public affairs for USDA and the U.S. Agency for International Development.

Trivia challenge

Guernsey and Jersey dairy breeds produce milk that is naturally high in beta carotene. That answers our last trivia question. For this week’s trivia, how many slices of pizza does the average American consume each year? We’ll have the answer in our next edition of the Dairy Star.

Don Wick is owner/broadcaster for the Red River Farm Network of Grand Forks, North Dakota. Wick has been recognized as the National Farm Broadcaster of the Year and served as president of the National Association of Farm Broadcasting. Don and his wife, Kolleen, have two sons, Tony and Sam, and five grandchildren, Aiden, Piper, Adrienne, Aurora and Sterling.