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Why expand a dairy portfolio in such a volatile environment? Will historical cycles in the industry hold true, or will cycles be deeper but shorter? Are higher feed costs and breakeven milk price levels here to stay?
Over the past two years, the Federal Reserve has been performing “stress tests” on the largest U.S. banks. “Stress tests” are used to better understand a business, its weaknesses and how much financial stress the key drivers of a business can withstand.
They are becoming more widely used due to a more volatile economy. Dairies have experienced record levels of volatility over the past two years and are now being stress tested by lenders for milk price and feed cost changes.
