The spread between the all-milk price and average feed cost has been narrower than usual heading into this spring, and members have been asking our Membership & Outreach Committee whether that squeeze is temporary or something to plan around for the rest of the year. The honest answer is a little of both. Feed costs climbed faster than milk prices through the back half of last year, and while that gap has stopped widening, it hasn't closed either — it's settled into a lower, thinner spread than most members budgeted for going into 2023.
For anyone selling fluid milk into the wholesale system, that spread is the number that actually decides whether the year is comfortable or tight, more than the headline milk price on its own. A high milk price with feed costs rising just as fast leaves you in roughly the same place as a lower milk price with cheap feed — what matters is the distance between the two lines, and right now that distance has stayed narrow enough that a lot of members with any milk margin coverage in place have been checking whether they're actually inside a payment trigger this quarter.
What this means if you're not selling fluid milk
If your operation buys milk rather than produces it, the same squeeze shows up on the other side of your ledger: a supplier under margin pressure is a supplier more likely to ask for a price adjustment mid-contract, or less willing to absorb a short-notice volume change. It's worth having that conversation with your milk supplier now, while it's still a planning conversation, rather than in June when a contract renewal is already on the table and both sides are working from worse numbers.
For farmstead members who both make and sell their own milk, the calculus is different again — you're not exposed to a wholesale spread in the same way, but your feed bill is climbing regardless of what any milk price index does, and that cost has to show up somewhere in your wheel pricing if it isn't going to quietly erode your margin all year.
What we're watching
We track membership renewal patterns alongside these margin numbers, mostly because the two move together more than people expect — a genuinely bad margin year tends to show up in our data about two quarters later as a softer renewal season, particularly among smaller producer members without much cash cushion. It's early to call this a bad margin year. It's a thin one, and thin years are the ones where a member who's usually reliable about renewing lets it slip because the checkbook is tighter than usual, not because anything's actually wrong with their operation or their relationship with the federation.
If margin coverage is new to you or you've let your enrollment lapse, our Membership & Outreach Committee can walk you through how the coverage tiers work and what a realistic trigger looks like for an operation your size — it's not a complicated program, but the choice of coverage level matters more in a year like this one than in a year when the spread is comfortable. And if cash flow is the more immediate worry, a call to us costs nothing and a lapsed membership is a lot easier to prevent than to reverse.
Next step: if you're not sure whether your operation would clear a milk margin coverage trigger this quarter, that's a five-minute conversation with our Membership & Outreach Committee, not a research project you need to do alone.
The International Cheese Federation (ICF) and More Cheese are entirely fictional. This post is demonstration content created for MemberJunction. All people, organizations, events, courses, certifications, figures, and quotations in it are invented, and nothing here represents a real association, a real business, a real person, or real professional advice.