How to tell if the dairy industry is struggling
The dairy industry in the United States has experienced some ups and downs, but some of the most volatile periods are still ahead, according to the industry’s chief executive.
Read MoreIn a note to clients Friday, Cowen & Fitzgerald Chief Executive Officer Richard C. Wolff said there was some evidence that the sector was on the right track.
He said the sector had seen a “significant” decline in the number of people with no jobs in the industry and that the decline was in part a result of the ACA, or the Affordable Care Act, which has been popular with consumers, but also driven by concerns about the quality of milk and other products that are sold to consumers.
The dairy industry has also experienced a decline in milk prices in recent months, Wolff noted.
“In recent months the cost of milk has decreased significantly,” he wrote.
“This decline is largely driven by a decrease in dairy productivity, and by other factors.”
The sector’s outlook, however, is much stronger than Wolff’s optimism, and its outlook for 2018 is even more positive.
“The dairy sector is in the midst of an exceptionally strong economic recovery,” he said.
“Our outlook for the coming year is for strong growth, with a more positive outlook for inflation and higher prices.”
Wolff said the dairy sector will likely see more of a resurgence in growth and profits as a result.
“The industry has seen the biggest acceleration in profits in nearly three years,” he added.
“In 2019 we expect to see growth of 7 percent, a 5 percent increase in the total revenue, and profits of $5 billion.”