We start the new year the way we started the last few months of the old one: watching a milk price that keeps drifting upward while a lot of our smaller members tell us their own margins haven't moved at all. Both benchmark milk classes strengthened again into January, and dry whey has been climbing steadily for weeks. Good news if you're selling milk. More complicated if you're buying it to make cheese and selling the cheese into a market that's still figuring out what a mostly-virtual year looks like.
A few of you have asked us directly what this means for pricing decisions in the first quarter. We can't tell you what to charge — that's not our job, and every operation's cost stack is different — but we can tell you what the numbers are actually doing, and where the pressure is coming from.
Two prices, two problems
If you're a small creamery buying raw milk on contract, a higher input price squeezes you from the supply side at exactly the moment when foodservice accounts are still thin. If you're a larger operation with your own herd or a long-term milk agreement, the same number reads as relief after a rough stretch. We've heard both stories on committee calls this month, sometimes from members two towns apart.
The bigger story underneath both is production. National milk output kept climbing through the back half of last year even as some processing and foodservice channels shrank, which is part of why farm-level returns haven't kept pace with headline price gains — more milk moving through the system doesn't automatically mean more money reaching the people who produced it. That gap between "the price went up" and "my check went up" is worth understanding before you make a purchasing decision based on a headline number alone.
The year-end federal relief package also included new support aimed at moving surplus dairy product to food banks rather than letting it back up in cold storage. Details on how that will actually run are still being worked out, and we'll pass along anything concrete as soon as we have it — we're not going to speculate on program mechanics we haven't seen yet.
What we're telling members
If your contract renews or resets this quarter, now is a reasonable time to ask your buyer or your co-op what's actually driving the number they're quoting you, rather than assuming it tracks the trade press exactly. Export demand for whey and butterfat has been a bigger factor than domestic retail demand for a while now, and that mix can shift the number in ways that don't match what you're seeing on your own shelf or in your own case.
If you want a longer look at how milk cost feeds into a retail price without guessing, our Pricing & Margin for Specialty Cheese course walks through building a real cost sheet rather than pricing off instinct or last year's number. It's running virtually again this quarter, which at this point is simply how most of our coursework happens.
We'll keep watching the Class III and Class IV numbers through the winter and flag anything that looks like a real shift rather than routine noise. In the meantime, if your own numbers look strange next to what you're reading in the trade press, the Membership & Outreach Committee is a good first call — plenty of other members are comparing notes on exactly this right now.
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.