If your milk-and-feed math has felt less punishing the last couple of months, you're not imagining it. The federal margin program that tracks milk price against feed cost breached its lowest support level in June and July, the worst stretch the program has seen since it started. Since August, that margin has been climbing back, and trade coverage this month puts it comfortably above the level that triggers the deepest support payments. It's a real recovery. It is not, members keep reminding us, the same thing as a good year.
The shape of it matters. A margin that spends the summer near catastrophic and only gets back to merely tight by November still means most of a calendar year spent underwater. Several members who lean on the margin-coverage program for planning purposes told us this fall that they're treating the recovery as a floor, not a signal to relax. Feed costs eased a little, and the all-milk price firmed up a little, and together that was enough to pull the number out of crisis territory. It wasn't enough to erase what the first half of the year cost.
What we're hearing from the case and the cave
On the retail side, members report that specialty and artisan volumes held up through the roughest stretch of the margin squeeze, which tracks with what a few of you predicted back at the spring conference. Shoppers trimming their overall grocery spend have, by and large, kept buying a wedge with a story attached to it. That's a genuinely good sign for the category, and it's worth saying plainly. It also doesn't change what happened on the production side of the business over the summer, where a strong case and a squeezed farm gate were both true in the same month.
A few members have also mentioned unusually strong prices for cull animals this year, which quietly padded some farm budgets that would otherwise still be underwater. It isn't a strategy we'd recommend building a plan around, but if your books look better than your milk check alone would suggest, that's very likely part of the reason why.
Members running smaller operations have told us the recovery showed up unevenly. A creamery buying milk on a monthly contract felt the worst of the squeeze immediately in June and July, then felt the recovery slowly, a few cents at a time, as new contract terms caught up with the market. A larger regional operation running longer contracts felt the squeeze later and is still working through it now, even as the headline margin number looks better. If your own numbers don't match the aggregate recovery everyone's talking about, that lag is very likely why, and it's worth mapping your own contract terms against the broader trend rather than assuming you're doing something wrong.
The policy piece, and why we're not predicting it
Farm-bill authorization for the current calendar year runs out at the end of December, and lawmakers in Washington are weighing whether to extend the existing bill for another year rather than pass a new one before that deadline. We're not going to guess how that lands in a blog post, and members who've watched this process before know better than to plan around a prediction. What we can tell you is what we'll do regardless of the outcome: if an extension moves, or doesn't, we'll walk through exactly what changes and doesn't change for the margin-coverage program members rely on for the coming year.
If you haven't looked at your own coverage election for next year, this is a reasonable week to do it, before attention turns fully to the holidays and the annual scramble that comes with them. The math this fall gives you a little more room to think it through carefully instead of reactively.
If margin has been unusually tight for your operation this year, we'd like to hear the specifics of how — not to publish them, but because it helps us know where to focus when we talk to policymakers on your behalf. Bring it up on the next regional call, or write in directly.
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.