Financially fit in 2026

MADISON, Wis. — A robust U.S. economy combined with a strong worldwide demand for protein were cited as reasons for optimism in the dairy industry at the recent PDP Business Conference.

Economic experts predicted 2026 to be a good financial year for dairy farmers during the March 5 session entitled “Positioning for Profitability” in Madison.

Dr. David Kohl, academic Hall of Famer in the College of Agriculture at Virginia Tech, facilitated a conversation with Gregg Doud, president and CEO of National Milk Producers Federation, and Dr. Ed Seifried, professor emeritus of economics and business at Lafayette College. Seifried is also chief economist of the Southwest Graduate School of Banking Foundation and dean of the Virginia and West Virginia Banking Schools.

“The economy is in solid shape,” Seifried said. “We’ve had only one negative quarter (of gross domestic product) in the last 4-5 years and growth last year as high as 4.4% for one quarter. You won’t see any drop in sales. I predict good growth for the next two years. I don’t think there is a recession in sight.”

The U.S. GDP, which represents customers’ ability to buy products, experienced good health in 2025. Except for a negative figure in the first quarter of last year, GDP rose 3.8% and 4.4% in the second and third quarters, respectively. Seifried said government spending weighed it back down to plus 1.4% in the fourth quarter.

With its $24 trillion economy, economic growth in the U.S. is incredible, Seifried said. The economies of other countries are much smaller, such as Canada at around $2.4 trillion and Russia at $2.2 trillion.

“Economically, the biggest insurance policy you have as a citizen is the size of the U.S. GDP,” Seifried said. “We’re extremely well diversified.”

That is not to say the country is without economic challenges, however. Seifried said five issues he sees confronting U.S. economics in 2026 include: high interest rates; weak labor growth due to layoffs spurred by artificial intelligence; high public debt and rising interest expense; policy related to trade, tariff uncertainty and regulations; and geopolitical risk.

“Do not be afraid of unemployment from AI,” Seifried said. “The unemployment rate is the same today as it was in 1950. AI may cause temporary unemployment, but permanent unemployment — never. People adapt. AI itself will be a huge employer.”

To counteract these issues, there are also positives such as a stable and abundant energy supply in the U.S. Tax cuts are also coming, Seifried said, providing consumers with more money to spend on products. AI-driven productivity and efficiency gains, stock market wealth, and the potential for lower interest rates as inflation moderates are additional factors that will help drive consumer spending.

U.S. consumers will spend an extra five cents for every dollar increase in the stock market and an extra seven cents for every dollar of appreciation in the price of their home, Seifried said. He said 2025 was a great year for the stock market, with the S&P 500 up 18%.

Seifried said he predicts a potential growth in GDP of 5% over the next 24 months.

“Interest rates are approaching the lowest point they’re going to get,” he said. “Now is a good time to buy more land and modernize your operation.”

In this economic upturn, the group said a high demand for protein helps set dairy farmers up for success.

“The demand for protein in the world is unbelievable,” Doud said. “You look over the next 10 years and beyond, the supply of animal protein worldwide comes nowhere near to meeting the demand. Europe is maxed out. New Zealand is maxed out. We have to change the business model in U.S. agriculture to orient towards protein. The dairy industry is already way ahead of the game.”

When it comes to protein, Doud said dairy is the most competitive in terms of pricing. He said dairy farmers are right where they should want to be for this protein movement.

“If you’re in the protein business, you’re rock solid,” he said. “Last year, we exported $9.5 billion in dairy products. Cheese exports are at an all-time record. Nearly all the new cheese processing that took place in the last year went to the export market. We are incredibly competitive in the world market.”

Trade deals with Indonesia, Vietnam, the Philippines and Malaysia are in the works. For example, the U.S. is helping Indonesia add milk to its school lunch programs.

“There are 250 million people in Indonesia,” Doud said. “These are the things going forward that change the game for us in the dairy industry. We have a strong domestic industry and strong domestic consumption. That’s going to give us the underpinning to do what we need to do in the export market to move our increased production.” 

Doud also said beef on dairy is a critical source of revenue for dairy farmers. He said he thinks this trend will continue for a minimum of three years, but more likely, for 4-5 years.

Going forward, Doud said dairy farmers need to work on risk management and cutting costs on the input side of the equation.

“Risk management and cost management are the real element to our success going forward,” he said. “Prices are going to be tough to come by. We have too much corn and way too many soybeans in the world relative to demand. Milk is up 3.7%. We have to continue to export it.”

Doud also addressed how President Trump views imports into the U.S.

“Trump’s premise is that no one gets access to the U.S. consumer for free,” Doud said. “If you want access, you’re going to do what’s in the best interest of the U.S. to have that access. Is it uncomfortable for some of us in agriculture because we import a lot and we export a lot? Yes, but we have to work on our supply chains in agriculture to deal with that because it’s the right thing for us to do to continue to grow our economy.”