Progressive Dairy interviewed Will Loux, senior vice president of global economic affairs at National Milk Producers Federation (NMPF), along with Paul Bleiberg, executive vice president of government relations at NMPF, to learn more about the economic outlook for the dairy industry in the coming year.
Q: How is the economic outlook for dairy in 2025?
LOUX: Overall, the economic outlook for U.S. dairy producers is much improved from the beginning of 2024. Input costs have come down significantly, particularly with regards to feed, while milk prices are staying relatively balanced. This return to profitability is a welcome reprieve for many dairy producers after several years in the red. Additionally, U.S. dairy producers have found additional ways to diversify income streams, most notably from beef-on-dairy.
Q: What provides the most optimism for 2025?
LOUX: The biggest source of optimism remains the consistent growth of U.S. dairy consumption. While economic headwinds and inflation have certainly dampened consumer spending, dairy has persisted in being a dietary staple. Even as U.S. consumers looked for bargains and went out to eat less, cheese, butter, protein-focused products, yogurts and many other dairy products saw growth at retail last year. With the U.S. economy finding its footing again with wage growth outpacing inflation (albeit modestly), we anticipate domestic dairy consumption is likely to see an even better year in 2025.
Q: What are the greatest opportunities for the dairy industry in 2025?
LOUX: From my perspective, U.S. dairy still has plenty of untapped potential to grow demand, particularly in international markets for U.S. cheese and proteins. With an unprecedented $8 billion in new processing capacity scheduled to come online in a three-year span – much of it in cheese and high-protein whey – U.S. dairy is investing in some of the most in-demand products, not just in the U.S. but around the world. Achieving success in highly competitive global markets will take plenty of investment and long-term commitment, but the U.S. has the opportunity to become the supplier of choice in those products for customers around the world.
Q: What are the dairy industry’s greatest challenges right now?
LOUX: Uncertainty. From both a market and a policy perspective, there is likely to be plenty of volatility in the year ahead as markets are being pulled in different directions today with more questions than answers. How will limited milk supply influence and be influenced by unprecedented levels of new processing capacity? Will Mexico’s emergence as the fastest-growing market for U.S. cheese (growing by more than the U.S. domestic market in both 2023 and 2024) continue? Will U.S. food service sales bounce back after a sluggish 2024?
Q: What policies, bills, legislation, etc., are having the greatest impact on dairy farmers as we begin 2025?
BLEIBERG: The farm bill extension enacted in December ensured the continuation of the Dairy Margin Coverage program, which is now open for 2025 sign-up until March 31. Congress will turn its attention to a full farm bill reauthorization this year, and that process poses several opportunities for dairy farmers and their cooperatives.
One legislative priority we’re seeking to get done – in any vehicle possible – is legislation to require the USDA to conduct mandatory dairy manufacturing cost surveys every two years and report the results to stakeholders. The industry recently completed a process to modernize the Federal Milk Marketing Order (FMMO) system, but all parties agreed that transparent data on dairy processing costs is sorely lacking, so this legislation will result in better informed future conversations on make allowances.
Another top priority is the Whole Milk for Healthy Kids Act, which was recently reintroduced in both chambers with strong bipartisan support. This bill would allow schools, but not require them, to serve milk at all fat levels and would put us in a good position to reverse the decline of milk consumption in schools.
Finally, Congress is due to reauthorize a slate of tax provisions that expire at the end of this year. One priority for dairy cooperatives is the Section 199A tax deduction, which cooperatives claim for domestic manufacturing activities but ultimately pass back directly to their farmer owners.
