A few members have asked us this month why the federal dairy margin program keeps sending checks in a year when cheese has, by most measures, had a decent run at the case. It's a fair question, and the short answer is that the program was never really measuring cheese demand. It measures the gap between milk price and feed cost, and that gap has now stayed narrow enough, for long enough, that payments have triggered for seven consecutive months this year.
That's worth sitting with for a moment. Seven months isn't a single bad quarter you can wait out; it's most of a production year. The uniform milk price across the federal milk marketing orders also came in noticeably lower this month than it stood in July, continuing a summer slide. On its own that's a modest story. Paired with feed costs that climbed all year on tight alfalfa and corn supplies in drought-affected growing regions, it's the reason the margin program has been doing exactly what it was designed to do — just more often than most of us would like.
Why the spread matters more than either number alone
It's tempting to watch milk price and feed cost as two separate lines and miss the story between them. A milk price that holds steady doesn't help you if grain and hay have gotten more expensive faster. A feed cost that's manageable doesn't help if your milk price has dropped under it. The margin program exists precisely because either number by itself tells you less than the two together, and this year the two together have been telling a fairly consistent story: the middle of the year has been tight for anyone still buying feed at retail prices rather than growing their own.
If you produce your own milk, you've likely felt this directly, in a feed bill that keeps climbing while your milk check doesn't keep pace. If you buy milk on contract, you've probably felt it as a supplier asking for a price adjustment mid-agreement, which is its own kind of headache and one that tends to land on your books with little warning.
What this means for your pricing, and what it doesn't
For our farmstead members — the ones milking their own herd and making cheese from it — this isn't abstract. Several have told us they're pricing their late-summer and fall product runs with next spring's feed contract already in mind, rather than waiting until the invoice arrives. That's a reasonable instinct in a stretch like this one. If your cheese is priced off a milk cost you set back in January, it's worth checking whether that number still holds, and whether seven months of a triggered margin has already told you it doesn't.
What a margin payment doesn't tell you is anything about your wholesale account, your cave, or whether your last batch of washed-rind held its paste the way you wanted. Don't let one number crowd out the others. We'd still rather hear from you about a slow-moving rind than a slow-moving milk check, even in a month like this one.
If you want to talk through what a tighter feed year means for your pricing, the Membership & Outreach Committee is a good first call, and our Pricing & Margin for Specialty Cheese course covers the mechanics in more depth than we can here. Either is a better use of an afternoon than staring at a spreadsheet 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.