With all the talk around interest rates, inflation and feed prices, I’d like to take some time to work through how they will impact your farm and the dairy industry as a whole in 2023.

Farm profitability faces significant pressure in 2023 as availability and high costs for farm inputs continue to be concerns. Deciding when to buy products and at what prices is a challenge given global and domestic market uncertainty. To secure products at reasonable prices, consider creating an input purchasing plan.

It’s been quite a while since dairy operators have had to budget for interest rate expenses. But the Federal Reserve raised interest rates six times in 2022, and policymakers expect more to come in 2023 in an effort to slow inflation by increasing the cost of borrowing.

Generally speaking, dairy producers are posting healthy margins right now. May milk prices were the highest on record, and 2022 prices are shaping up to be the highest ever, breaking the record set in 2014.

Predicting feed costs for 2022-23 is like predicting weather in July and August. Feed costs will be influenced by moisture conditions, degree days, delayed planting and delayed harvesting of legume/grass forages.