1. Agricultural Price Forecast Update on Impact of Future Growth in Nevada Dairies Fallon, Nevada May 22, 2014 Michael Helmar mhelmar@cabnr.unr.edu University of Nevada, Reno University Center for Economic Development

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

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

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

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

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

7. Improved Supplies Ease Crop Prices Sources: USDA, FAPRI

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

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

10. 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

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

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

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

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

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

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

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

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

19. 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

20. Contact Information This presentation can be accessed on the University Center for Economic Development website at: http://www.unr.edu/business/research-and-outreach/uced/food-and-agricultural- policy-research-institute-(fapri) For more information or questions regarding this outlook please contact Mike Helmar at: Mhelmar@cabnr.unr.edu Mhelmar@cabnr.unr.edu