Agricultural Price Forecast Update on Impact of Future Growth in Nevada Dairies Fallon, Nevada May 22, 2014 Michael Helmar University of Nevada, Reno University Center for Economic Development

Meeting the Needs of the New Plant Nevada dairy Sources: USDA, UCED

FAPRI Baseline Major factors in the outlook –Global economy, political environment –Global ag supply/demand balance –Agricultural policies –Energy needs and policies –Technology/productivity

Emerging Economies Drive Global Growth Sources: IFS, IHS Global Insight forecast Real GDP, % change

Individual Markets Move Differently Sources: IFS, IHS Global Insight Exchange rate index, 2005=100

Interest Rates Could Spur Investment Sources: IFS, IHS Global Insight forecast Interest rates, %

Improved Supplies Ease Crop Prices Sources: USDA, FAPRI

Milk Prices Will Reflect Feed Costs Sources: USDA, FAPRI-MU U.S. milk prices

Growth Opportunity for Dairy Industry Source: International Trade Administration U.S. dairy exports, $mil

Impacting the Nevada Price Outlook Major factors in the outlook for 2014 –Continuing drought Water storage Range and pasture conditions –Hay acreage –Fallon WMP plant and dairy herd expansion –Fire season –California

Weather, WMP Plant Influence Hay Outlook Nevada forage prices Sources: USDA, UCED

Drought Reduces Irrigated Acres, Number of Cuttings Source: USDA Nevada hay acreage, ths

California Losing Alfalfa Acres Source: USDA California hay acreage, ths

Worst Start in Years Nevada range condition, 0=Very Poor, 25=Poor, 50=Fair, 75=Good, 100=Excellent Sources: USDA, UCED

Milk Prices Start High, Will Fall With Feed Costs Source: USDA, FAPRI All-milk price, $/cwt

Different End Use, Different Price Source: Nevada Dairy Commission Nevada milk price, $/cwt

Profitability Expected to Return in 2014 Nevada dairy, $/cwt of milk sold Sources: USDA, UCED

Meeting the Needs of the New Plant Nevada dairy Sources: USDA, UCED

Wrap-Up: Mixed Bag Global economy strengthening Feed costs are declining So far, milk prices are cooperating California a major market for Nevada Multi-year drought makes water shortage more acute this year Dairy demand will boost hay needs Range conditions might not be adequate

Contact Information This presentation can be accessed on the University Center for Economic Development website at: policy-research-institute-(fapri) For more information or questions regarding this outlook please contact Mike Helmar at: