How can producers get in front of the interest rate hike?
The dairy industry says that producers are in a good position to weather the interest rate hike.
The Fed raised rates a quarter of a point last week in an effort to control inflation. Dairy risk management group Ever.Ag says that the increase was inevitable, but the market had been trading in front of the move for the last six months.
Private markets have already moved rates back to pre-COVID levels, and the bigger question is how can producers get in front of it.
“The interest rate is one part of it, but I really do believe that we have to rebalance the supply chain to really stop that because part of why we’re dealing with these prices isn’t just about inflation, it’s about the compromised state of the flow in our economy. We’ve got to get the flow of products through our system to be fluid again. The start and stop of product right now, the slowdown at ports, the lack of available trucks and drivers, and lack of capacity at processing plants and manufacturing plants, that kind of stuff is having an impact on those prices too,” according to Mike North.
Ever.Ag says that premium on the front end of the market will remain, as long as there are questions around the future availability of product.