Breaking free from the chains of the past Where
truth moves faster than a Holstein calf No law
waiting on some printed page We're charting new
ground in the digital age From genomic codes
to robot facts We cut through the noise, no hold
them back not your daddy's dairy news tonight
we're sparking Welcome back to the Bullvine Podcast,
where we cut through dairy industry noise to
get you the insights that actually matter for
your operation. And today we are doing a deep
dive into a feature piece about the Ciudad Juarez
border blockades, the $1 .45 billion in frozen
exports. The hidden pipeline risks that are completely
blindsiding your milk check. Right. And I want
to set the scene right away because the calendar
is incredibly important for this deep dive. Today
is March 6, 2026. If you're listening to this
on the tractor right now, you have exactly two
weeks. two weeks before a massive coordinated
national mobilization is planned to hit Mexico
on March 20. Yeah, and we need to be clear here.
This isn't a rumor floating around the local
coffee shop. It is a scheduled event that threatens
to repeat the absolute devastation of the November
2025 mega blockades that we all just lived through.
Exactly. And we need to talk about what that
actually means for your farm, because I am looking
at the stakes right now, and they are entirely
disconnected from what producers see on a future
screen. That is the core disconnect we really
have to unpack today. You know, you might be
sitting there at the farm desk staring at your
screen and hedging your prices perfectly. You
are doing everything by the book to protect your
margin against market crashes. You're paying
the premiums. Right, you're paying the premiums.
But your actual mailbox check, the physical money
deposited into your account that you use to pay
the feed mill, pay your labor, service your debt,
that check is quietly shrinking. This deep dive
is entirely about the massive gap between that
digital screen and your physical mailbox. Because
it's about how the dairy industry's so -called
most reliable customer actually relies on the
most unreliable high beta transit corridor in
North America. Hold on, let's stop right there.
High beta transit corridor. You are throwing
stock market trader talk at me before we have
even gotten out to the barn. Let's translate
that for the guy milking cows right now. What
do you actually mean by a high beta transit corridor?
Fair point. In the finance world, beta is a metric
used to measure volatility. If a stock has a
high beta, it means it swings wildly compared
to the rest of the market. High risk, high reward.
Okay, so a wild ride, basically. Yeah, exactly.
A wild ride. So when I say we're relying on a
high beta transit corridor, I mean the physical
road and bridge infrastructure between the U
.S. and Mexico is incredibly volatile. It is
prone to sudden violent disruptions. You're shipping
a highly perishable product. fluid milk, fresh
cheese down a pipeline that can literally be
changed shut overnight. Oh, okay. That makes
total sense. It's like trying to ride a mechanical
bull instead of a carousel, but you don't actually
know when the bull is going to get turned on.
That's a perfect way to put it. Yeah. Let's look
at the baseline problem here, which I think we
can call the illusion of price hedging. I was
looking at the numbers from the source material
we pulled for this. Let's review the tape. December
2025, class three settled at $15 .86 per hundred
weight. Right. Then January dropped to $14 .59.
According to the Dairy Star, that was the lowest
since July 2023. Now, if I am a producer, those
are normal, albeit frustrating, price moves.
Yeah, it's cyclical. It's cyclical, and it is
exactly the kind of volatility my hedge is built
to handle. I buy a dairy revenue protection endorsement,
I use the tools, and I cover that drop. My broker
tells me I am safe, so why shouldn't I sleep
well at night? Because your broker is only managing
your price risk. They are not managing your pipe
risk. Let's look at the physical reality of what
happened to the U .S. average mailbox price back
in October 2025. It dropped 85 cents in a single
month, down to $18 .70 per hundredweight, Ouch.
Yeah, Ouch is right. That was a massive $5 .58
below the prior year. And as we moved into late
2025, we saw a staggering $1 .30 per hundredweight
national gap between the statistical all milk
price and what farmers actually received. So
the all milk price says one thing, but the check
in the mail says something completely different.
Exactly. Your hedge protected you from the Class
3 drop on the board, sure, but it did absolutely
nothing to protect you from that $1 .30 gap that
eroded your actual physical cash flow. I'm going
to play devil's advocate here, representing the
skeptical listener. If I am paying good money
for a DRP endorsement, I am paying to protect
my margin. Are you telling me that insurance
policy is completely useless if a bridge gets
shut down? It is not useless for the broader
market, but it does absolutely nothing for local
basis blowouts caused by physical logistics.
There is a fundamental difference between price
risk and pipe risk. A hedge tool protects you
against the Chicago Mercantile Exchange taking
a dive, but there is no ticker symbol on the
CME for physical supply chain paralysis. Right.
You can't buy a put option on a traffic jam.
Exactly. You can't. There is no insurance policy
that pays out when a bridge 1 ,500 miles away
in Ciudad Juarez is chained shut by protesters.
So McCann Mechanically, how does a block bridge
in Mexico steal money out of a mailbox check
in Wisconsin or Texas? Walk me through the actual
plumbing of how that loss travels backward up
the supply chain. This is the harsh reality of
how basis risk gets passed down the chain directly
to the producer. Let's think about how your co
-op operates when the physical pipes jam. Let's
say your co -op has millions of pounds of milk
or finished powder destined for Mexico. Suddenly,
the border closes. The door is shut. The door
is shut. The Class 3 price on the board stays
exactly the same. The market hasn't technically
crashed, but your co -op... suddenly has a massive,
expensive logistical nightmare on its hands.
They have product they cannot deliver. They have
trucks parked in the desert, racking up demurrage
fees. Which is essentially a penalty charge for
keeping a freight truck waiting, right? Yeah,
exactly. Because the trucker is sitting there
burning diesel to run the reefer unit to keep
the product cold, and they aren't getting paid
for making a delivery. They are just a parking
lot on wheels. So the demurrage fees skyrocket.
The co -op is forced to either fire sale highly
perishable milk into lower value domestic channels,
or they have to pay plants overtime to turn it
into powder and store it in warehouses that are
already completely full. And the co -op's margin
gets violently squeezed. And what we know about
co -ops, and I say this as someone who has sat
through a lot of co -op board meetings, is that
when they panic and bleed cash, they don't just
eat that loss. No, they socialize it. They socialize
it. They pull the levers they actually have control
over on your milk check. They look at your milk
check and they start making adjustments. They
slash your export premiums. They cut quality
incentives that you normally quit with ease.
Or they implement over -based pricing penalties.
Yes, exactly. Essentially punishing you for producing
your normal amount of milk because they suddenly
have too much milk locally. Even though nothing
changed on your farm, the pipe just broke. Suddenly
your basis, that difference between the board
price and your mailbox price, just blows out.
So the hedge did its job on the digital screen,
but I still lost a small fortune because the
pipe broke. I can see why producers are incredibly
frustrated. You do the work, you hire the risk
advisors, you pay the premiums, you lock in your
margin, and you still end up short on cash to
pay for silage because of a traffic dam in Ciudad
Juarez. We really have to stop looking at the
dairy industry purely through the lens of price
and start looking at it through the lens of infrastructure.
And to do that, we need to do a reality check
on a very popular industry narrative. Let's talk
about the anatomy of a mega blockade and contrast
the boardroom narrative with the reality on the
ground. I am really glad you brought this up.
In the source material, there is a reference
to a CoBank report from December 2024. Yeah.
The title of the report was literally Mexico
has become America's most reliable dairy customer.
I remember that one. Yeah. And the numbers they
cited to back that up are frankly massive. Mexico
takes 4 .5 percent of total U .S. milk production.
They account for more than one fourth of the
total U .S. dairy export value. We export 1 .38
billion pounds of milk solids down there. They
are covering 80 % of their entire dairy deficit
with our milk. On paper, if you are looking at
a spreadsheet in a corporate office in Chicago
or Washington, D .C., that looks like the textbook
definition of reliable. It looks like an incredible
success story of exports going up to the right
year after year. But let's look at the physical
reality just a few weeks after that report came
out. November 23 and 24, 2025. The mega blockade.
Okay, so the map looks great on a spreadsheet,
but you were looking at the actual ground reports
from last November. What actually happens when
that spreadsheet collides with thousands of angry
protesters? It is total paralysis. You had massive
farmer and trucker groups, specifically the National
Front for the Rescue of Mexican Farmland, which
goes by the acronym FNRCM. You had the National
Association of Carriers, known as ANTAC, and
the Movimiento Agricola Campesino, or MA. They
launched coordinated blockades before dawn. Let
me stop you there because that is a lot of alphabet
soup. Who actually are these people on the ground?
Are we talking about a dozen guys with picket
signs or is this a massive operation? This is
a massive, highly organized operation. We are
talking about... Thousands of domestic Mexican
farmers, commercial truck drivers, and agricultural
workers. And the scale of what they achieved
was unprecedented. They didn't just stand on
a sidewalk. They shut down major federal highways
and physically occupied international customs
facilities in at least 17 different states across
Mexico. Oh, 17 states. Yes. They systematically
targeted the main commercial corridors in Chihuahua,
Sinaloa, Zacatecas, and the arterial routes radiating
out of Mexico City. I remember reading the FreightWaves
report about the Ciudad Juarez to El Paso crossing,
which is Mexico's busiest commercial border zone.
They reported there were 38 ,000 trucks stranded.
I want everyone listening to just try and picture
that. 38 ,000 commercial trucks. That isn't a
traffic jam. That is a newly formed city of stranded
metal. Just idling in the heat. Yes. You have
drivers sitting in the cab of their truck in
the desert sun. Behind them is a tanker full
of highly perishable fluid milk. Or a reefer
full of fresh cheese. They can't go forward because
there are literal tractors chained together on
the bridge. And they can't go backward because
there are 10 ,000 trucks behind them. That milk
is literally ticking like a clock. And that ticking
clock translates to instant financial bleeding.
The source material calculates that the industry
losses hit $25 .8 million per hour. Maquiladora
plants across the border. These are the massive
manufacturing hubs that build everything from
car parts to electronics. They went into technical
stoppages because they simply didn't have parts
arriving. They just sent people home. Yeah. 30
,000 manufacturing workers were sent home to
sit idle. But here is the critical data point
for the dairy farmer listening to this right
now. Dairy was the very first product to run
short in Mexico. I was reading through the notes
here and it mentioned something about local businesses
in Juarez hitting a wall instantly. How fast
did things actually shut down there for the grocery
stores and distributors? Almost immediately.
Ivan Perez Ruiz, the president of the Juarez
Chamber of Commerce, actually went on the record
and stated that the blockades nearly resulted
in a complete shortage of dairy products. Milk
and cheese were the most impacted goods in the
entire supply chain. More than anything else.
More than anything else. Maria Teresa Delgado
Zarate from Index Juarez estimated the daily
export losses at $250 million across all sectors.
Manuel Sotelo Suarez, who represents the trucking
sector, warned the city was very close to running
out of basic supplies entirely. You really have
to understand the physical nature of what we
produce. You can park a truck full of steel auto
parts in the desert for a week. The steel doesn't
care. It is fine. You cannot park a tank or a
fluid milk in the desert for a week. The entire
dairy export model relies on high -velocity transit.
If the wheels stop turning, the product dies.
As an impartial deep dive, we need to look at
the root causes of this without taking sides.
Because understanding the why is crucial to understanding
the actual ongoing risk to your farm. This isn't
just random vandalism. The Mexican groups organizing
these blockades are protesting over real, potent,
deeply felt issues in their country. they have
legitimate grievances from their perspective.
Right, exactly. They are demanding higher basic
grain prices for their domestic growers. They
are actively opposing changes to Mexico's general
water law, which affects their irrigation rights.
They are marching for what they term food sovereignty,
essentially arguing that Mexico shouldn't be
so heavily reliant on U .S. imports for its basic
caloric needs. Right. And in October 2025, the
leader of FNRCM publicly alleged that the Chicago
Mercantile Exchange and transnational grain companies
were actively manipulating markets to hurt the
Mexican farmer. Exactly. Now, as the source notes,
there wasn't specific evidence provided to support
that claim of direct market manipulation by the
CME. But frankly, the empirical validity of their
political claim almost doesn't matter to your
milk check. What do you mean it doesn't matter?
If they're protesting over something that isn't
technically true, shouldn't the government just
clear them out? Whether you or I agree with their
politics or whether their economic theory holds
water is completely irrelevant to the flow of
milk. What matters is that these grievances are
potent enough to mobilize tens of thousands of
people to park heavy machinery on international
bridges. These are real visceral political forces
capable of completely paralyzing North American
infrastructure. They have learned that the border
choke points are their most effective leverage.
They are using your milk trucks as a deliberate
negotiating tool against their own government.
Which brings us to the absolute most painful
part of this deep dive, the actual barn math.
We need to follow the money from that paralyzed
bridge in Juarez straight back to the farm's
cash flow, because this is where the theoretical
talk of basis risk turns into the physical reality
of missing a payment to the feed mill. Let's
do some simple barn math. I want to look at the
baseline economics we are dealing with right
now. Let's lay out the baseline. According to
dairy economist Bill Brooks of Stoneheart, consulting
the estimated 2026 income over feed cost, what
we call the IOFC, is sitting at just $10 .14
per hundredweight. According to the Dairy Star,
that is down $2 .30 from 2025. So right out of
the gate, before a single protester even thinks
about walking onto a bridge, the margin cushion
on the farm is already incredibly thin. $10 .14
over feed costs does not leave a lot of room
for error when you factor in labor, fuel, equipment
repairs, and debt service. It is razor thin.
And then you add in that $1 .30 per hundredweight
national gap between the all -milk price and
actual farmer receipts that we discussed earlier,
which FarmShine's Sherry Bunting documented extensively.
Let's pause on that gap. You mentioned de -pooling
in component math earlier when we were talking
about co -op deductions. That jargon gets thrown
around at co -op meetings all the time, and half
the room falls asleep. Explain mechanically how
things like de -pooling widen that gap even before
a crisis hits. De -pooling happens when a milk
handler or a co -op decides to pull their milk
out of the federal milk marketing order pool
because the advanced prices of classy fluid milk
or class 2 are actually lower than the manufacturing
classes like class 3 cheese. They keep that extra
value for themselves rather than sharing it with
the whole pool. Right, they protect their own
bottom line. Yes, they protect the house. Component
math gets tricky because if they are forced to
dump milk or downgrade it from a high -value
cheese class to a low -value powder class, the
value of your butterfat and protein gets diluted
in their internal accounting. So that $1 .30
gap is already eating into your $10 .14 margin.
But when a blockade hits, that gap blows out
even further because the co -op suddenly has
millions of dollars in unexpected logistical
losses they have to cover. Let's slow this down
and walk through the exact math of a 30 -day
blockade backlog. I want everyone listening to
picture their own bulk tank right now and apply
these numbers to their operation. All right.
Let's say your co -op's effective pay price ends
up running 40 cents per hundred weight below
what your hedge implied for 30 days. They justify
this because they had to reroute milk. dump product
into lower classes, and eat massive freight penalties.
40 cents doesn't sound like a catastrophic number
on paper to someone outside the industry. It
doesn't, until you scale it up to the size of
a modern dairy. If you are running a 700 -cow
herd and you are shipping roughly 560 hundredweight
a day, that 40 -cent hit over 30 days translates
to a $6 ,720 loss. Just vanish from your check.
And if you are running a 1 ,200 -cow herd...
If you are running a 1 ,200 -cow herd shipping
960 hundredweight a day, that exact same 40 -cent
scenario costs you $11 ,520. And if you have
a 2 ,400 -cow dairy, you are looking at a $23
,000 surprise deduction over a single month.
With an income over feed cost already incredibly
tight at $10 .14, an $11 ,000 or $23 ,000 surprise
hit isn't just a minor annoyance. That is a tractor
payment gone because of a traffic jam a thousand
miles away. It is the difference between making
payroll comfortably and scrambling. It's the
difference between paying the feed mill on time
to keep your discounts and having a very uncomfortable,
sweaty conversation with your agricultural lender.
Absolutely. And to me, the most insidious part
is how the co -op actually pulls that money out
of your account. They don't send you a transparent
line item on your statement that says Juarez
blockade penalty deductible. No, the extraction
is completely opaque. You just look at your check
and notice the export premiums you usually rely
on are suddenly gone. The quality incentives
you usually hit because you have great somatic
sell counts are suddenly Structure differently
or reduce. They move the goalposts. They absolutely
move the goalposts. They might invoke a harsh
overbase pricing penalty telling you that anything
you produced over your historical average is
going to be paid at an abysmal salvage rate.
They use the complex pricing levers already built
into your existing contract to socialize the
pain of the closed pipe. Okay, so let's dig into
the physical logistics of that pain. I want to
talk about what actually happens to the physical
milk when the bridge closes. Because this...
case study in logistics really exposes why the
co -ops bleed so much cash so quickly. When Juarez
shuts down the processing plants in the U .S.,
don't just stop receiving milk from the farm.
The cows keep milking. You can't turn a Holstein
off like a faucet. So what does the plant actually
do with the milk? The plants go into immediate
scramble mode. They have incoming milk from the
farms and they have outgoing product that suddenly
has nowhere to go. Their first instinct is to
try to reroute the loads hundreds of miles out
of the way to cross at different ports of entry
like Nogales in Arizona or Nuevo Laredo in Texas.
But I'm guessing they aren't the only ones with
that brilliant idea, right? Exactly. Every single
industry, auto parts, electronics, produce, they
are all trying to reroute through those exact
same secondary ports. So those ports instantly
get jammed up too. The infrastructure simply
cannot handle the diverted volume. If the milk
can't cross anywhere, that highly perishable
product... has to be shoved into lower -valued
domestic channels. So they fire up the dryers.
Yeah, they might have to run the dryers at maximum
capacity, paying triple overtime to the staff
just to turn fluid milk into milk powder so they
can safely store it. And they do this hoping
that the buyers in Mexico will wait out the strike
and buy it later. All of this adds massive freight
costs, emergency processing costs, and immense
inventory holding costs. And the friction doesn't
magically end the minute the protesters go home,
does it? The source material points out that
even after a blockade was called, the bleeding
continues. Far from it. The source notes that
even after a truce was called, like the one Mexico's
Interior Minister Rosa Isila Rodriguez managed
to negotiate on November 27, shippers were told
to expect 10 or more days of severe delays just
to clear the physical backlog. It takes weeks
to unspool a logistical knot of 38 ,000 trucks.
And we absolutely cannot ignore the physical
danger of rerouting this product. This isn't
just about drawing a new line on a map. You are
sending truckers on massive detours through areas
with severe life -threatening security risks.
The security aspect is terrifying. The source
cites a report from El Pais stating there are
8 ,000 cargo robberies per year in Mexico. That
averages out to 21 a day, and over 80 % of those
involve violence against the driver. ANTAC, the
Carriers Association we mentioned earlier, claims
the real number is actually somewhere between
54 to 70 major thefts daily because so many of
them go entirely unreported to corrupt local
authorities. So the official stats are just the
tip of the iceberg. Exactly. CONCAMIN, the Industrial
Chambers Confederation, estimates cargo theft
costs the Mexican economy around 15 million pesos
per day. So put yourself in the shoes of that
logistics manager at the co -op. trying to reroute
a highly perishable, highly valuable product
through rural territories with some of the highest
cargo theft rates in the world on roads that
weren't designed for this kind of volume, driven
by drivers who know they are targets. It is an
absolute logistical nightmare. And every single
ounce of that inefficiency, every security surcharge,
every lost load ultimately gets deducted from
your milk check. Which brings us to the collision
course we are on right now. We mentioned at the
very top of this deep dive that today is March
6, 2026. Two weeks from now on March 20, FNRCM
and ANTAC have called a massive national mobilization.
This was widely reported by UNO TV and confirmed
by MexicoBusiness .News. Additionally, the CNTE
Teachers Union is striking from March 18 to March
20. It is a coordinated effort. It is a planned
action. It's a scheduled, heavily publicized
event, and it is entirely tied to the looming
July 1st, 2026 USMCA joint review. This is a
huge pivot point for the industry. This is where
the border transitions from being just a logistical
checkpoint where you show your paperwork to a
strategic geopolitical choke point. Break down
this USMCA review for us neutrally. What are
the two sides actually fighting for here? Under
Article 34 .7 of the United States -Mexico -Canada
Agreement, the pact has to undergo a formal joint
review this July. And we have two incredibly
powerful, totally opposing forces colliding head
on. On one side, you have the U .S. agricultural
lobby. More than 120 U .S. agricultural groups,
including massive players like the National Milk
Producers Federation and the U .S. Dairy Export
Council, have drawn a line in the sand. And what
are they asking for? They want the USMCA extended
with minimal structural changes, but they are
demanding strict enforcement of market access
commitment. Because they have billions of dollars
riding on those commitments, right? Exactly.
They are desperately trying to protect the $8
billion in new dairy processing capacity that
is currently coming online across the US. That
massive expansion in processing was built almost
entirely on the assumption that those exports
to Mexico would continue to flow unimpeded. And
on the other side of the table. What do the Mexican
farm movement actually want out of this July
1 review? Neutrally speaking, the Mexican farm
movements led by groups like Mexico Solidarity
are treating this as an existential fight. They
are calling this upcoming protest a mobilization
for food sovereignty and agricultural transformation.
They are explicitly demanding that basic grains
and essential agricultural products be removed
from the USMCA entirely. They want to protect
their own farmers. Right. They want the right
to protect their domestic markets with tariffs
and quotas that the USMCA currently forbids.
They are treating the July 1 review as a critical
pressure point, and they have realized that parking
trucks on the international bridges is the absolute
most effective leverage they have to force their
government's hand. So these blockades are no
longer a one -off tantrum over a local water
dispute. They are a deliberate scheduled negotiating
tool being used on a continental scale, which
leads to a really contrarian take that I think
we need to discuss because it goes against everything
I have heard at every Gary conference for the
last decade. I know exactly where you were going
with this. In the dairy industry, we have been
fed this relentless narrative for 10 years that
exports going up and to the right is inherently
and purely good for the farmer. Co -op executives
brag about their export volumes at every single
annual member meeting. They show the bar charts,
everyone claps, and they say they are feeding
the world. Right, it's the ultimate feel -good
slide in the PowerPoint presentation. Exactly.
But we need to stop blindly blaming the market
for our margin compression and start seriously
questioning the pipe? Yes. The contrarian view
here is that extreme reliance on one single massive
buyer is a massive, totally unpriced vulnerability.
We established that Mexico covers 80 % of its
massive dairy deficit with U .S. milk, and almost
all of that physical volume is concentrated through
just a handful of bridges, far Laredo, Juarez,
and Nogales. If a co -op boasts about Mexican
export dominance but has absolutely zero contingency
plan for when those specific bridges close, if
their only plan is to dump milk and socialize
the loss, they aren't just being optimistic,
they are being negligent. They are passing existential
basis risk directly to you, the producer, without
compensating you for taking on that risk. It
feels like the entire industry has been completely
blinded by demand. We see the consumption numbers
in Mexico going up, the middle class growing,
more pizza being eaten, and we completely ignore
the extreme fragility of the physical supply
chain required to fulfill that demand. I hedge
my milk prices on the CME because I know the
market is volatile. But by signing with a heavily
export -dependent co -op, I am leaving my farm
completely exposed to the physical volatility
of four concrete bridges over the Rio Grande.
That is the exact paradox. You lock the front
door of your farm with a price hedge, but you
leave the back door wide open to supply chain
chaos. All right, so let's get incredibly practical
here. A dairy farmer is listening to this. They
just finished their morning milking, they are
driving the pickup to the feed store, and their
head is absolutely spinning with basis gaps,
geopolitical blockades, and high beta corridors.
What are the specific actionable things they
need to remember and act on from today's deep
dive? The source material lays out four clear
paths for the farm broken down into immediate,
medium -term, and long -term positioning. Let's
start with path one, the 30 -day stress test.
I need you to explain this so I can go do it
this afternoon. Path 1 is an immediate action.
Within the next 30 days, honestly do it this
week before the March 20 protests hit, you need
to sit down at the kitchen table and pull your
last 12 months of actual milk checks. Calculate
your exact average daily 100 -weight shift. Then
run a brutal stress test. Model what happens
to your cash flow if your mailbox price comes
in 30 cents worse and then 50 cents worse than
your hedge implied for 30 consecutive days. So
translate those cents per hundredweight into
hard dollar numbers for my specific herd size,
just like we did with the barn math earlier.
Exactly. You need to know your number. Once you
have that hard dollar number, look at your upcoming
cash flow plan. If a $15 ,000 or $20 ,000 sudden
unexplained drop breaks your debt covenants or
means you can't pay the feed mill, you need to
book a meeting with your agricultural lender
immediately. Don't wait for the surprise. Do
not wait for the milk check to bounce in April.
You walk into the bank this week and say, look,
here is what these Mexican border scenarios look
like for our cash flow. If this pipeline breaks
and my co -op passes the cost to me. What do
you need to see from us to bridge the gap? Proactive
conversations beat reactive canic every single
time. I love that. Control what you can control.
What is path two? This looks like a medium -term
strategy regarding the co -op. Path two is push
for a written co -op playbook. If you are committed
to your co -op and you want to stay with them,
you need to demand aggressive transparency. At
the very next member meeting or even in a direct
email to your field rep today, you need to ask
for an exposure map. Ask them point blank what
exact percentage of our total solids go to Mexico.
And more importantly, what percentage of our
milk moves specifically through the vulnerable
bridges at Pharr, Laredo, Juarez, or Nogales.
And if the co -op executives or the field reps
can't even ballpark which bridges carry your
milk. If they don't know the physical route of
their own product that is a massive red flag
regarding their risk management, you also need
to ask them to state on the record their exact
order of operations for cutting premiums if a
border freezes. You want to know which plants
pull back intake first. In what specific order
do they adjust quality incentives and over -based
pricing? You need to know exactly how they plan
to socialize the loss before the loss occurs
so you can plan your own finances accordingly.
That brings us to path three, which is another
medium -term move. Align your risk advisors.
I talk to my broker all the time about where
the market is going. How do I need to change
that conversation? You need to force your brokers
and advisors to look past the digital screen.
Ensure they are discussing basis moves when pipelines
jam, not just CME price fluctuations. Your hedge
strategy might actually need a new internal trigger.
If the gap between your hedge implied price and
your actual mailbox check widens beyond 30 or
50 cents for two consecutive pay periods, that
should be a massive red flag. A signal the pipe
is broken. Yes. Your advisor should be helping
you track that basis drift so you know when it's
time to start asking your co -op those hard questions
about pipeline issues. That makes perfect sense.
The broker shouldn't just sell me a policy and
walk away. They need to monitor the physical
efficiency of my milk check. Finally, path four
is long -term positioning. Treat Mexico as a
high beta outlet. We define high beta earlier
as highly volatile and prone to sudden swings.
How do I apply that to my long -term business
plan? Before you sign any new long -term supply
deals with a handler, and especially before you
take on millions in debt to build a new barn
and expand your herd, you must apply a realistic
risk haircut to your long -range margin expectations.
You have to intellectually recognize that what
we used to politely call occasional rough patches
at the border are no longer occasional. They
are the new normal. They might now be highly
predictable seasonal political events tied to
trade negotiations. You have to aggressively
price that physical volatility into your expansion
plans. If I don't factor in the pipe risk -grusk,
my 2027 business plan is basically just crossing
my fingers and hoping that nobody in Chihuahua
decides to park a John Deere on a bridge. And
hope, as they say, is not a risk management strategy.
It certainly isn't. You have to build margin
buffers that can absorb a closed border or you
are gambling your farm's equity on international
trade politics. As we wrap up this deep dive,
I want to leave everyone listening with a larger
philosophical question to mull over while you
finish up chores today. Consider this. If one
out of every six U .S. tanker loads relies on
overseas transit and the dairy industry's massive
$8 billion processing expansion is banking almost
entirely on a customer whose front door can be
chained shut by a few parked tractors? Are we
building the future of American dairy on a geopolitical
fault line? If the pipe never fully stabilizes,
cash flow management on the family farm is going
to forever change from a simple math equation
into a geopolitical guessing game. That is the
exact reality we are facing. This has been another
deep dive from the Bullvine podcast. For more
straight talking, no BS industry analysis, make
sure you head over to www .thebullvine .com.
Subscribe wherever you listen to your audio.
We are out with new deep dives every day and
our upcoming topics will be digging into crossing
by crossing export flows and analyzing how different
co -op structures actually absorb and distribute
border stress. Keep your eyes open, watch your
basis, and we will catch you on the next one.