In this episode of The Milk Check, find out why some dairy producers may be eyeing the exit. Sarina Sharp, risk manager at Ag Business Solutions and the writer behind TC Jacoby’s Weekly Market Report joins the Jacoby team this week. Sarina brings invaluable insights as we dig into critical topics like:

• Milk prices and financial stability: How long can dairy farmers survive with Class III prices dipping below $17?


• Supply chain shifts: How whiplash tariffs, changing federal orders, and fluctuating demand are affecting the U.S. dairy market.


• Bird flu and milk production: How the bird flu has changed U.S. milk production, and where it may strike next.

Tune in to The Milk Check episode 75: Exit stage left: Why some producers are selling out while they can. If you like milk (and we know you do), then pour yourself a mug and tune in for insights on how to navigate this uncertain landscape and stay ahead in the coming months.

Special Guest:

• Sarina Sharp, risk manager, Ag Business Solutions, and market analyst for the Daily Dairy Report

The Jacoby Team:

• Josh White, vice president, dairy ingredients


• Ted Jacoby III, CEO & president, cheese, butter & dry ingredients


• Mike Brown, vice president, dairy market intelligence


• Gus Jacoby, president, fluid dairy ingredients & dairy support

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Intro (with music):

Welcome to The Milk Check, a podcast from T.C. Jacoby & Company, where we share market insights and analysis with dairy farmers in mind.

Ted Jacoby III:

Welcome everyone to the March 28th, 2025, edition of The Milk Check, a T.C. Jacoby & Company podcast. It is my pleasure to welcome a couple of special guests to the podcast this week, first, Sarina Sharp of Ag Business Solutions and the Daily Dairy report. Welcome to the podcast, Sarina. Most of you know that Sarina is also the writer of the T.C. Jacoby Weekly Market Report, which we publish every Friday. Sarina, we’re honored to have you join us today. More importantly, thank you for the partnership. I can’t tell you how often I get compliments on the weekly report that you write for us, so thank you very much.

Sarina Sharp:

Thanks for having me. Thrilled to hear it.

Ted Jacoby III:

In addition, we have a few of our usual suspects: my brother Gus, head of our fluid group; Josh White, head of our dairy ingredients team, and I am excited to announce that Mike Brown, formerly of IDFA and Kroger fame, is joining the Jacoby team as our new vice president of Dairy Market Intelligence. Mike, I am excited to have you on the team, and I look forward to having you on this podcast as a regular presence.

Mike Brown:

Well, thank you, Ted. I’m delighted to be here. It’s good to be back in markets and away from government regulation. I’m very excited about the opportunity. And Sarina, I am really looking forward to working with you. I’ve been a fan for decades now. Appreciate that opportunity to work with you as well.

Sarina Sharp:

Time flies.

Ted Jacoby III:

It sure does. So my first question is this. We’ve been talking for probably a couple of years now about the heifer replacements and the issue that’s been evolving because many dairy farmers are breeding to beef simply because it’s really hard to pass up $700 for a black cow rather than spending $3,000 to raise that calf into a heifer. But we’re getting to the point where right now, for example, our traders that sell into the retail space, they’re telling us demand’s not that great. Those who are selling into the food service space are saying demand’s not that great. Even our traders who export are telling us that Trump’s rhetoric about tariffs is having an effect and making it difficult for us to export. In other words, demand is not that great on the horizon. Milk prices have come down. Class III price is probably going to be in the low 17s, maybe even into the high 16s in April. Are we getting to the point that we’re starting to reach that line where dairy farmers are going to say, hey, beef prices are still high, we can sell our dairy cows, we can cull our herd, we can drop our cow numbers? And how does that play out given the heifer replacement issues that we’ve been talking about? Sarina, I’m going to ask you that question first.

Sarina Sharp:

Thought that one might be coming to me. I think there’s an assumption that cull rates go up when milk prices go down because dairy producers start to cull. So when dairy producers see low milk checks, the first thing that they do is actually try to increase milk production. So most dairy producers are not going to start culling in a way that shrinks their individual herd. However, there will be a group of dairy producers who decides, you know what? These are tough financial times. This is not for me anymore. I think especially right now after several years of very good prices and high beef prices, there is a group of dairy producers out there who’ve been looking for the right time to retire an exit ramp, and they were not going to make that exit when milk prices were high and revenues were good. But now that that’s here and beef prices are still high and heifer prices are very high, they have a really obvious out, sell my cows, cash it in, get a big check, either retire or move on to a different career.

That allows other producers, the ones that want to keep their barn full but have been culling at a very low rate for the past 18 months, to buy some of those cows that they’ve not been able to find for a while and then boost their cull rates. It’s kind of a two-step process to where we see the herd actually shrinking, but I think that’s the route that we’re going to take. And then, of course, the longer that these low milk prices are around, the more we’ll get a second category of sellouts, which is people who financially can’t make it in this environment. We’re already seeing an uptick in the number of dispersal auctions on the docket, particularly in the Pacific Northwest where some producers are getting steep discounts. Those cows are going to move out of those older, kind of retired, and economically unsustainable areas, and they’re going to move into some of these other dairies. And then that’s going to allow cull rates to go up.

Ted Jacoby III:

Generally speaking, right now though, are the balance sheets for most dairy farmers in pretty good shape after a couple of really good years?

Sarina Sharp:

Yes, they should be. We’ve had relatively low feed costs. It varies a lot region to region and which Class of milk do you get and what’s your basis, but generally speaking, dairy producers are in good shape. And, of course, that beef income that we’re talking about, that has really helped pad the bottom line in the past couple of years here.

Ted Jacoby III:

With those healthy balance sheets, how much runway do we have before some of these factors really come into play? Because I’m assuming the savings accounts are in good shape, and so they can probably go three to four months at least in many cases without having to start panicking, and they’ll just ride it out for a while. But I have no real feel for how long that may happen relative to some of the past times when we get lower prices.

Sarina Sharp:

So aside from that group of producers I mentioned in Washington that is getting steep discounts, I think that’s generally the case, that producers have healthy balance sheets, they’re on good terms with their lender, no one’s in a panic here, they haven’t seen a small milk check yet. We’re talking about lower prices in April. That’s a mid-May milk check. So we haven’t really started the clock on the financial distress-type sellouts, and that’s a several month process, but I’ve been looking to retire now seems like a pretty good time. When you’ve got this much uncertainty and you’re starting to see milk prices slip, but cow prices are still very high, that’s an opportunity that you don’t want to evaporate.

Ted Jacoby III:

Would you say it’s safe to say then that it’s mostly the guys who want to retire or thinking about retire and don’t have children who want to go into the business, those dairy farmers who exit the business in 2025 are primarily going to be of that category, even if we have an extended period of prices, let’s say in the $16 range, just because the balance sheets are healthy and outside of the Pacific Northwest? The financially distressed dairy farmers, we’re probably a year away from reaching a point like that. Is that a fair way to put it?

Sarina Sharp:

I don’t know if we’re a year away, but I wouldn’t expect any in the next few months. It’s a second half of the year problem.

Ted Jacoby III:

Got it. Gus, I’m going to throw it at you. You got any questions for Sarina or Mike?

Gus Jacoby:</stro