COLUMBUS, Ohio — This will be remembered as one of the best years ever in the history of the dairy industry in the United States. So what is the outlook for 2015?

According to Cameron Thraen, associate professor in The Ohio State University’s Department of Agriculture, Environmental and Development Economics, milk prices, the global export market demand and the 2014 farm bill’s new Margin Protection Program (MPP) will be topics to watch in the industry for 2015.

“U.S. milk production and dairy exports have increased significantly over the last decade, with an increase in milk production of 34 billion pounds from 2003 to 2014 and a dairy export increase of 25.7 billion pounds, said Thraen, also a member of the National Program on Dairy Markets and Policy.

“Dairy export demand is an exploding part of U.S. milk production. We are exporting a significant share of U.S. production over what we did a decade ago. Dairy exports were 4 percent of milk production in 1996’s 154 billion pounds, and now this figure is 15.5 percent of 2014’s 204 billion pounds. This increased export demand accounts for 75 percent of the growth in U.S. milk production.”

According to Thraen, with U.S. milk prices expected to soften in 2015 and a slowdown in global demand for U.S. dairy exports because of increased dairy supplies in Europe and Oceania and slowing dairy imports in Russia and China, the dairy boom seen over the last decade is showing signs of slowing down.

“At the end of 2014, U.S. dairy commodity prices are making a significant realignment with lower world prices, and it is natural to assume that this realignment will result in dramatically lower income over feed cost margins for 2015,” he said. “The strong U.S. dollar and high U.S. dairy product prices could bring storms to the U.S. dairy export market in 2015.”

With the recent rise in dairy exports, the number of cows and production rates on dairy farms in the United States have increased significantly over the last decade, Thraen said. In 2001, the average number of cows per dairy farm in Ohio was 61, while statistics from the Ohio Agricultural Statistics office in Reynoldsburg indicate in 2014 this number reached 96.

Additionally, milk production per Ohio dairy farm in 2001 was 1 million pounds, while in 2014 this number reached 1.9 million pounds. In Ohio in 2014, there were an estimated 267,000 milk cows for a total milk production of 5.4 billion pounds, resulting in $1.3 billion in gross revenue from the sale of milk – a record for Ohio.

“These Ohio numbers reflect what is happening at a national level,” he explained. “Nationally, the number of milk cows at the end of 2014 is approaching 9.3 million head, and production is gaining speed, reflecting strong equity building on dairy farms after difficult financial periods in 2009 and in 2012.”

Also impacting the U.S. dairy industry is the passage of the U.S. Agricultural Act of 2014, better known as the farm bill, and the new voluntary MPP, or dairy safety net, in the legislation.

“For the first time in the history of U.S. dairy policy, dairy farmers will have a program that allows them to take a stake in their own national safety net policy,” Thraen said. “For the first time they are given the opportunity to individually select a level of financial support and to pay a modest amount for their selection.”

His research focuses on market and financial risk analysis and risk mitigation in the U.S. dairy industry. Research output from this program was instrumental in the development of a Web-based decision support tool for MPP. The tool helps producers calculate total premium costs and administrative fees associated with the program, as well as provides a daily forecast of net MPP payments that will be made during the coverage year and the total MPP benefit that the producer can anticipate.

The decision support tool is the official educational tool supported by the USDA’s Farm Service Agency, which has federal responsibility for administering the MPP. MPP enrollment closed Dec 5. To learn more for next year, visit www. fsa.usda.gov/mpptool