If you sat down with your accountant this fall, you probably already know the headline: 2022 has been a record year for farm milk prices. Class I, II, and IV prices are the highest they've ever been, and the annual Class III average is on pace to land second only to 2014. For members who ship fluid milk or buy it by the truckload, that's been a genuinely good year on paper, even with everything else it took to get there.
The complication is what comes next. Industry economists watching the same data we are have started warning that 2023 margins will be tighter than this year's numbers suggest, even with milk prices staying relatively supported. Feed costs and replacement-heifer costs are running at record highs of their own, and a stronger dollar is making U.S. dairy exports a harder sell into markets like China. The advice we've seen from more than one analyst boils down to the same thing: don't spend down the working capital 2022 built up, because margins are going to erode from here even if the topline price holds.
What this means for a small producer's pricing
For members buying milk on contract, the practical question isn't whether 2022 was a strong year — it clearly was — it's how much of that strength carries into 2023's cost structure. A tighter margin environment doesn't necessarily mean falling milk prices; it can just as easily mean input costs eating the difference before it reaches your bottom line. That's a subtler problem to plan around than a straightforward price drop, because your invoice this winter can look perfectly normal while the math behind it quietly worsens.
If you set a wholesale or gift-box price this fall based on this year's input costs, now is a reasonable moment to build a light review into your January routine rather than waiting for a supplier invoice to tell you the story. A ten-minute pass through your cost sheet — milk cost per pound of finished cheese, packaging, labor — before you print a new price card can save you from carrying a stale number into spring.
The demand side is holding, for now
The other piece worth watching is demand. Cheese has continued to show up as one of the more resilient categories in savory snacking, and appetite for cheese-forward products hasn't slowed the way some of the more discretionary grocery categories have this year. That's encouraging for members selling through retail and specialty channels, but it's not a guarantee — a stronger dollar and softer export demand are exactly the kind of pressures that can eventually work their way back into domestic pricing too.
None of this is a forecast we're asking anyone to bet the farm on. It's a snapshot, and snapshots change. But if your year-end planning includes a hard look at 2023 pricing, this is a fair moment to do it: a record year behind you, a tighter margin environment ahead of you, and a full quarter of runway before your spring price list needs to go out the door.
If you want a second set of eyes on your cost model, the Membership & Outreach Committee keeps a standing list of members willing to talk through pricing approaches with newer producers — reach out through the member portal and we'll make an introduction.
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.