Posted: January 19, 2012 at 7:18 pm
By Cindy Zimmerman
USDA World Agricultural Outlook Board Chair Gerry Bange expects milk production to increase in 2012.
Talking about the latest USDA Dairy Outlook in terms of production and price estimates, Bange says, “U.S. milk production in 2012 is expected to increase about 1.3%. We’re looking now at 198.5 billion pounds.” That’s unchanged from the last forecast, but the 2011 production total was lowered. “It looks like 2011 is going to come in right around 196 billion pounds. That’s down about 100 million pounds from what we previously thought.”
Given the 1.3% increase in production expected for the coming year, Bange says they are expecting lower prices compared to 2011. “We’re now looking at an all milk price for 2012 at $18.70 per hundred weight,” he said. That’s up 20 cents from the previous USDA forecast but down 7% from the $20.14 of 2011.
Posted: September 26, 2011 at 3:34 pm
By Cindy Zimmerman
Despite rising feed prices and a hot summer, milk production continues to increase this year, with forecast milk output rising 1.5 percent in 2011 to 195.7 billion pounds, according to USDA.
Cow numbers continue to increase more than expected and output per cow appears to have rebounded from the July and August heat. Cow numbers are projected at 9.2 million head this year, and output per cow was raised slightly from last month to 21,280 pounds for the year.
USDA reports that milk output in August was up over 2% from a year ago, output per cow up 18 pounds over last year, and the dairy herd is now 102,000 head more than 2010 with 3,000 head added just during August.
Prices have been very strong and this year’s average all milk price is expected to set a record $20.40 cwt, up over $4 from last year. “A very strong price and an incentive for milk producers,” said USDA Outlook Board Chairman Gerry Bange. However, Bange says they are revising the 2012 outlook downward. “While we do expect production to be up 1.4%, we think it will be about 300 million pounds less than we thought,” he said. “The reason we came off the 2012 forecast is because we are looking at weaker milk prices for 2012 at $18.30 for the all milk price, and we do expect the higher grain prices to work their way through the system.”
Posted: September 15, 2011 at 9:25 am
By Cindy Zimmerman
Dairy, livestock and poultry producers were represented during a hearing this week before a House Agriculture subcommittee on concerns about feed availability and the main theme of all the witnesses was the impact of ethanol policy on feed availability.
Testifying on behalf of the dairy industry was Dr. Eric Erba with California Dairies. “From our point of view, the problem is not feed availability, it is the price of feed,” Erba said. “Feed has been and continues to be available, but not at prices at prices that make good financial sense for dairy producers” since feed costs represent almost 65% of the cost of producing milk.
Erba noted that California dairy producers are particularly vulnerable to feed price increases because they buy most of their corn for feed, rather than grow it on their own operations. “Dairy producers are critical of the federal policy that favors fuel over food because of the evidence that policies put animal agriculture at tremendous risk for higher production costs with no guarantee of higher prices for product produced,” he said.
Posted: September 9, 2011 at 5:18 pm
By Cindy Zimmerman
The House Agriculture Committee’s Subcommittee on Livestock, Dairy, and Poultry held an audit hearing Thursday on how USDA dairy programs are working, current conditions and productivity in the dairy industry, and possible public policy challenges moving forward.
“The events of 2009 exposed what many have long-held to be an inadequacy of some of our current dairy programs. While some observers may argue that additional funding may improve the overall effectiveness of our dairy safety net, our current budgetary outlook makes this option a non-starter,” said Chairman Thomas Rooney (R-FL). “Innovative and effective ideas are needed in order to ensure that our programs support our producers, facilitate product and market development, and continue to ensure the availability of safe, abundant, and affordable products for our consumers.”
USDA Deputy Administrator for Dairy Programs Dana Coale gave an update to the committee on implementation of the Mandatory Price Reporting Act of 2010. “We are on scheduled to hopefully have the program up and running by the first part of 2012,” she said.
Coale noted that USDA issued a proposed rule in June to implement the provisions contained in the Mandatory Price Reporting Act of 2010. Under the proposed rule, AMS would develop the electronic system and collect the data. The comment period closed August 9 and AMS is currently reviewing the seven comments received.
Coale was asked about the status of proposals submitted by the Dairy Industry Advisory Committee to address price volatility. “Of the 23 recommendations that were presented to the secretary, over half of them requested either new funding or higher levels of funding,” she explained. Others required the secretary to have new legislative authority.
“Of the remaining recommendations, the department has completed five of those,” and three others are being considered, said Coale. “So we have taken what the advisory committee has done and we’ve been reviewing it and analyzing it.”
Coale says USDA is also working with Congress to review legislation proposed by Reps. Collin Peterson (D-MN) and Mike Simpson (R-ID) which includes a margin protection program, a Dairy Market Stabilization Program and reforms to the Federal Milk Marketing Order system.
Posted: February 18, 2011 at 7:59 am
By Cindy Zimmerman
The dairy economy was a topic of discussion during a full House Agriculture Committee hearing Thursday where Secretary of Agriculture Tom Vilsack testified about the outlook for the farm economy.
“The livestock and dairy industries could face some financial pressures in 2011 and bear watching,” Vilsack told the committee. Getting more specific in his written testimony, Vilsack noted that dairy receipts are forecast to increase in 2011, but remain below 2007 and 2008 levels.
While livestock prices are expected to remain strong and further improvement in milk prices is likely in the months ahead, higher feed costs could lead to below average margins for livestock and dairy producers in 2011. Milk production is estimated to increase by 1.8 percent in 2011 to 196.1 billion pounds. While feed costs are up considerably in recent months, a decline in cow numbers may not occur until later this year because of the large number of replacement heifers available. Milk per cow is forecast to increase again this year but at less than the pace for 2010. The gain in output per cow last year was due to good weather in addition to moderate feed prices. In recent weeks, both the domestic and international markets for dairy products have tightened considerably leading to a sharp increase in wholesale dairy product prices and futures prices for milk. Milk output has been affected by cold weather in the U.S. and Europe and heavy rains in New Zealand and Australia. Since early January, the wholesale prices of cheddar cheese, butter and nonfat dry milk have increased by 25-50 percent. The all-milk price is forecast to average $17.70-$18.40 per cwt. this year, compared with $16.29 in 2010 and $12.93 in 2009. While milk prices are forecast to be higher in 2011, increasing feed costs could continue to put financial pressure on dairy producers, especially those producers that purchase feed at current price levels.
Vilsack was asked specifically when USDA’s Dairy Industry Advisory Committee, which has been meeting for over a year, would be releasing a report. “We anticipate a report the first week of March,” Vilsack said. “They have finished their meetings and they are in the process of finalizing the draft of the report.”
Vilsack says there is a good deal of agreement, although not unanimous consensus, within the committee which was charged with trying to determine how best to address the issue of volatility in dairy markets.
Posted: February 11, 2011 at 1:33 pm
By Cindy Zimmerman
Implementing legislation aimed a reforming Wall Street could have an impact on farmer cooperatives, including dairy co-ops.
As the Commodities Futures Trading Corporation (CFTC) implements provisions of the Dodd-Frank Act involving over the counter (OTC) derivatives, the Commission must ensure that farmer co-ops can continue to effectively manage risk and offer hedging tools to their farmer-owners, a representative of the National Council of Farmer Cooperatives (NCFC) said during a hearing in Washington this week.
The comments were made by Ed Gallagher, president of Dairy Risk Management Services, a division of Dairy Farmers of America, and vice president of risk management for Dairylea Cooperative, at a House Committee on Agriculture hearing looking at implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
“Due to market volatility in recent years, cooperatives are increasingly using OTC products to help them diversify their exposure by customizing their hedges,” Gallagher testified. “In addition, OTC derivatives offer cooperatives the ability to provide specialized products to farmers and ranchers to help them better manage their risk and returns. A co-op can aggregate its owner-members’ small volume hedges or forward contracts and offset that risk with a futures contract or by entering into another customized hedge via the swaps market.”
For an example, Gallagher discussed the ways in which his co-op helps their dairy farmer members hedge against increases in feed prices. Without the co-op involvement, he emphasized, individual producers would be unable to mitigate this risk effectively.
“Many producers are not able to use the futures markets to hedge input risk because of the larger volumes underlying the relevant futures contracts,” Gallagher said in his written testimony. “Furthermore, corn and soybean contracts do not trade on a monthly basis—while most of our members purchase feed on a monthly basis.”
A wide variety of farmer co-ops, including those in the grain and livestock sectors, use OTC derivatives to offer similar products.
Source: NCFC press release
Posted: November 18, 2010 at 5:10 pm
By Cindy Zimmerman
Agriculture Secretary Tom Vilsack says USDA’s Dairy Industry Advisory Committee is expected to make recommendations soon on how to address the issues of milk price volatility and dairy farmer profitability.
“They are on track to make some preliminary recommendations in December or January,” said Vilsack during a press conference with farm broadcasters last week. “Obviously dairy prices have improved a little bit over where they were last year. I hope that doesn’t take away from the urgency of doing something because we can just as easily dip back into historic low prices as we did in 2009.”
Vilsack says the recommendations from the committee could take many forms. “It may be something that’s done through a regulatory process, or it may be something that requires legislation, or it may be something that’s appropriate to fold into a 2012 Farm Bill discussion,” he said.
Listen to or download Vilsack’s comments here: Vilsack Dairy
Posted: September 20, 2010 at 12:20 pm
By Cindy Zimmerman
A new report from the Food and Agricultural Policy Research Institute at the University of Missouri (FAPRI-MU) has analyzed the impact of adopting the current California fluid milk standards throughout the U.S.
The study was done at the request of the four co-chairmen of the Congressional Dairy Farmer Caucus – Congressman Joe Courtney of Connecticut (D), Congressman Timothy Walz of Minnesota (DFL), Congressman Devin Nunes (R-CA), and Congressman Peter Welch (D-VT). The purpose was to update previous studies done when there were high levels of nonfat dry milk in storage, compared to now when there are virtually none.
While the study concluded that adopted the California standards would result in higher milk prices, FAPRI noted that the actual impact of the policy will depend on how is it implemented. “Analysis
of imposing California fluid milk standards across the rest of the U.S. is dependent on some key variables,” the report says. “Two examples of these variables are how costs of fluid milk fortification will be shared and how consumers will accept a higher solids fluid product.”
The basic conclusion reached by the study is: “Iimposing California fluid standards increases producer milk prices and consumer fluid milk prices. These effects become less over time as the industry adjusts to the changing standards. Fortification allowances could work to minimize these effects depending on how they would be implemented. The increase in producer milk prices would reduce CCC dairy outlays but the effect is small.”
Read the study here.
Posted: August 19, 2010 at 8:23 pm
By Cindy Zimmerman
U.S. dairy operators are expanding herds again and that will mean more production next year.
The latest USDA milk report shows July output 3% ahead of July a year ago, at 15.3 billion pounds. Production per cow in the 23 major states averaged 1,830 pounds for July, 59 pounds above July 2009.
The total herd size is still smaller than last year, but probably not for much longer. “The fact of the matter is that for about the past six months or so we’ve been seeing cow numbers actually increase in the U.S.,” said USDA Outlook Board chairman Gerry Bange. The number of milk cows on farms in the 23 major States was 8.37 million head, 26,000 head less than July 2009, but 19,000 head more than June 2010.
Prices are also up, coming back faster and farther than expected. But, Bange thinks the all milk price next year will probably be held in check by production that could increase by one and half percent from this year. So, the forecast average price is now 16.05 per hundredweight, down 35 cents from the previous forecast, which Bange says “reflects the fact that we’re seeing substantially more milk production and anticipating more than we did a month ago.” The forecast for next year is about five cents/cwt higher than this year’s average.
Posted: June 27, 2010 at 5:00 pm
By Cindy Zimmerman
Hundreds of dairy farmers attended a workshop Friday in Madison, Wisconsin on competition in the dairy industry held jointly by the U.S. Departments of Agriculture and Justice.
“This is the third session of these joint workshops which, from our perspective, have been and should continue to be a major success and an important example of government collaboration,” said Assistant Attorney General Christine Varney, opening the event with Agriculture Secretary Tom Vilsack. “We know that dairy farmers are concerned about a lack of choices for buyers, about the way that their milk is priced, and about a year of dispiriting returns for their labors. It is my hope that today’s conversations will allow us to bring attention and clarity to these issues, and help us to think hard about the role that the Department of Justice and the Department of Agriculture can play in promoting the health and competitiveness of dairy markets in these economic times.”
Panels at the workshop featured representatives from Congress, the Commodity Futures Trading Commission, dairy producing states, industry organizations and farmers themselves. Both of Wisconsin’s U.S. senators attended the event. Senator Russ Feingold says he worked to ensure there was adequate time allotted for the public to participate and raise their concerns directly with administration officials. “These workshops are incredibly important because these officials are getting out of Washington and hearing directly from the family farmers, cheese makers and others whose lives and livelihoods have been impacted by consolidation within the dairy industry,” Feingold said. “I am particularly pleased the administration followed my suggestion to have two public comment sessions.”
The Chicago Mercantile Exchange and its role in price volatility was the target of several complaints at the hearing. Sen. Herb Kohl emphasized the need to make sure dairy pricing is transparent and expressed concerns about potential market manipulation. “The Commodity Futures Trading Commission has reported that the volume of cheese traded in Chicago generally represented less than 1 percent of all cheese produced in the U.S.,” said Kohl. “This is a situation where the tail, controlled by a few traders in Chicago, can wag the dog of the market for milk across the country. At a time when Americans’ trust in financial markets is low, relying on a market that can be easily manipulated should worry all of us. I call on CFTC and the CME to strongly monitor the spot cheese market. We must have market transparency that ensures a fair price for farmers.”
The purpose of the workshop was to gather testimony from dairy industry representatives, which will be taken back to Washington and discussed by the two departments to determine what, if anything, can be done to address producer concerns.
Posted: April 5, 2010 at 2:54 pm
By News Editor
Take a moment to read the recent CEO comment by National Milk Producers Federation (NMPF) Jerry Kozak. It contains important information about the future of the dairy product price support program (DPPSP). Read the full column here.
In the 12 years I’ve been CEO of NMPF, we have vigorously defended the function and importance of the price support program. It’s been as essential a focus for NMPF as any other single policy item. In the 2008 Farm Bill, we actually worked to make improvements in it, shifting the focus away from supporting a milk price, and toward supporting key commodity prices.
But at the end of the day, this question remains: is the dairy product price support program the best use of federal resources to establish a safety net to help farmers cope with periods of low prices? Is it effective? I believe, the answer today on both counts, is no. Here are the major reasons why:
1. It reduces total demand for U.S. dairy products and dampens our ability to export, while encouraging more foreign imports into the U.S.
2. It acts as a disincentive to product innovation.
3. It supports dairy farmers all around the world and disadvantages U.S. dairy farmers.
4. It isn’t effectively managed to fulfill its objectives.
5. The price levels it seeks to achieve aren’t relevant to farmers in 2010.
For all of these reasons, what NMPF is now focused upon is a transitional process that shifts the resources previously invested in the dairy product price support program, to the income protection program that I have discussed previously.
In summary, discontinuing the DPPSP would eventually result in higher milk prices for U.S. dairy farmers. By focusing on indemnifying against poor margins, rather than on a milk price target that is clearly inadequate, we can create a more relevant safety net that allows for quicker price adjustments, reduced imports and greater exports. As a result of our DPPSP, the U.S. has become the world’s balancing plant. As time marches on, so, too, must our approach to helping farmers.
Source: National Milk Producers Federation
Posted: October 2, 2009 at 8:19 pm
By Cindy Zimmerman
The new fiscal year for the U.S. Department of Agriculture began October 1, but this week a 30-day continuing resolution was passed after an amendment by Senator Bernie Sanders (I-VT) was included to allocate $350 million in emergency dairy assistance under the budget.
The measure adopted by the conference committee specified $290 million for direct payments and $60 million for purchase of cheese. However, California Sen. Barbara Boxer placed a hold on the Fiscal Year 2010 Ag Appropriations bill, expressing concern that the emergency spending might discriminate against dairies in Western states, and requested a meeting with Secretary of Agriculture Tom Vilsack to discuss how the emergency spending will be allocated.
Sec. Vilsack says he wants to make sure the assistance is allocated correctly. “You can use the Milk Income Loss Contract (MILC) program, but that doesn’t necessarily benefit all the dairy farmers,” Vilsack said Thursday after a meeting with members of the Congressional Dairy Farmer Caucus. “Dairy farmers in California have probably already reached their limit, so you have to look at creative ways to help them at the same time you are helping the dairy farmers across the country.”
Vilsack advocates a more long term solution to the dairy industry situation. “We have to come up with a process in dairy that shrinks the instability in the pricing. What we have now is a boom and bust cycle, what we really need is more stable pricing.”
Posted: October 1, 2009 at 3:03 pm
By Cindy Zimmerman
World Dairy Expo Photo Album
World Dairy Diary coverage of World Dairy Expo is sponsored by:
This edition of the Milking Parlor podcast focuses on the Dairy Price Stabilization Program proposed by Holstein Association USA as a way to address the current dairy industry economic situation and minimize milk price volatility for the long term.
I spoke with John Meyer, executive secretary and CEO of Holstein Association USA, about the plan during an interview at World Dairy Expo. “One of the beauties of this program is that nothing has to be affected,” Meyer says. “The Dairy Price Stabilization Program does not require the Farm Bill to be opened, nor does it affect any of the current dairy programs. It’s a very simple thing to be implemented and it can be done very quickly.”
Meyer says they are getting good industry support for the plan and hope to get a bill written and considered by Congress, possibly as early as the end of this year.
Listen to this podcast here:
milking-parlor-wdx09.mp3
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Posted: September 21, 2009 at 5:16 pm
By News Editor
The National Milk Producers Federation’s (NMPF) Strategic Planning Task Force agreed last Friday to pursue a four-part approach to implementing sweeping changes as to how federal dairy policies protect producers and how farm-level milk prices are established.
Recognizing the need to promote programs that will help reduce price volatility and protect producer income, the Task Force agreed last week at a meeting in Chicago to take action on the further development of a multi-pronged approach that, if fully implemented, would assist in maintaining the on-going viability of the nation’s dairy farms and revise some of the more perplexing and less popular aspects of the national milk pricing system.
The four features of NMPF’s plan include: revamping the safety nets of the Dairy Product Price Support and Milk Income Loss Contract programs; creating a new dairy producer income insurance program; addressing the need to improve participation in the producer self-help program, Cooperatives Working Together (cwt), while allowing it to better address periodic imbalances in the milk supply; and reforming the Federal Milk Marketing Order program.
“These four tracks are the foundation for a new future direction for milk pricing in the U.S.,” said Jerry Kozak, President and CEO of NMPF. “With the concurrence of the Task Force, we will immediately begin hammering out the specific details of each element of this new and comprehensive program. We will move quickly, but responsibly, to fashion a dairy safety net and milk pricing system that work in tandem, leveraging the outcome of one program to the benefit of another, whenever possible. For example, we believe a producer income insurance program can be structured to achieve a measure of production control now advocated by a segment of our industry.”
“We shouldn’t underestimate how big a challenge these changes represent, but we also shouldn’t underestimate the shared desired to dramatically alter the current system. Both the Task Force members and our staff recognize that the status quo is not as attractive as the potential to make far-reaching, positive changes down the road,” Kozak said.
The Strategic Planning Task Force has been meeting to analyze what long-term steps are in the best interests of the U.S. dairy producer sector. As a result of Friday’s meeting, the Task Force instructed NMPF staff to immediately begin fleshing out the operational aspects of the four elements.
In particular, the Task Force is pursuing how an income insurance program would be designed in such a way as to provide a better safety net to protect the net profit margins of farmers, which the current price support program and the MILC don’t always do during times of high production costs. In addition, the Task Force is exploring not only improving price discovery mechanisms and how changing the Federal Milk Marketing Order program would improve the pricing signals sent to farmers, but also the elimination of unpopular aspects of the current system, such as make allowances. Rounding out its assignment from the NMPF Board of Directors, the Task Force is also seeking new ways to address the free-rider issue associated with participation in the CWT program and how the program itself can become even more effective in the future.
As this long-term approach progresses, NMPF continues to focus on short-terms steps to help farmers, including urging the Congress to appropriate $350 million in dairy aid to farmers in the fall. House and Senate appropriators are expected to decide in the coming days on the extent of the aid package, and how it will be used. NMPF has recommended that Congress allocate the money for purchases of cheese products that would then be donated to food banks and similar charitable organizations that serve needy populations.
Posted: September 19, 2009 at 8:06 pm
By Cindy Zimmerman
Even though dairy producers continue to lose money, milk output is only expected to drop about one percent in 2010, according to USDA Outlook Board chairman Gerry Bange who sees higher prices in the future.
“We do look for a price turnaround,” Bange says. “We’re looking at a $15.05 per hundredweight price for 2010, that’s up nearly 24 percent from the price we expect in 2009, which is about $12.15.”
And Bange expects those prices to be reflected across the full range of dairy products. “We’re looking for a stronger cheese price, looking for a stronger butter price, stronger non-fat dry milk pricing, whey pricing – so we’re looking at prices up rather sharply for 2010,” he says.
However, with prices down this year by about 38 percent compared to last year, Bange says they are not expected to fully recover to those levels by next year.
Posted: September 8, 2009 at 7:11 pm
By News Editor
From the USDA’s newly released “Livestock, Dairy & Poultry Outlook,” a report from the Economic Research Service.
Dairy: Continued rises in milk per cow offset reduced herd size, slowing the rate of decline in milk production in 2009. Continued reductions in the national dairy herd will push milk production further below year-earlier levels in 2010. Imports are expected to rise slightly, and exports remain in decline. Growth in domestic commercial use remains slow this year and should continue slow next year. Some strengthening in prices is expected next year as milk production declines.
Milk production during the second quarter of 2009 was up one-tenth of 1 percent from the second quarter of 2008, even though herd size was 53,000 head smaller
than the corresponding quarter last year. June milk production was down two-tenths of 1 percent from a year earlier. While the June reported herd size was
86,000 head less, production per cow was 13 pounds more than the corresponding month last year. USDA forecasts corn and soybean meal prices to be lower this
crop year. The lower feed prices and cheaper alfalfa hay helped support additional feeding and milk production despite the overall contraction signals from the market. Coupled with relatively slow herd contraction, milk production is projected at 188.2 billion pounds for 2009, less than a 1-percent reduction from 2008.
Prospects are for 2009/10 feed prices to decline slightly from 2008/09, helping boost the milk-feed ratio from this year’s lows. The lower expected feed prices
could provide modest relief to producers as milk prices strengthen over the course of the year, but hardly presage a turnaround in overall dairy market prospects for
producers. The lower feed prices and continued herd contraction will likely continue to boost output per cow in 2010. However, next year, the forecast herd
contraction to 8.9 million cows will outweigh the forecast 1.9-percent increase in output per cow and milk production will likely slip to 186.5 billion pounds.
Although exports were up in June, for the rest of the year exports will be reduced in light of higher domestic prices and increased dairy product availability in world
markets, which reduces the competitiveness of U.S. products. Continued accumulation of dry milk powder in the European Union will likely pressure world
prices, further reducing U.S. export prospects. Overall, exports on a fats basis will remain at 3.8 billion pounds, virtually unchanged in 2010 compared with 2009. On a skims/solids basis, 2010 exports will be slightly higher at 21.2 billion pounds compared with 20.0 billion pounds expected for this year. These forecasts remain well below 2008 totals.
The current USDA forecast assumes that Commodity Credit Corporation net removals will become negative in 2010 as product purchased under the higher
support prices moves back into the market. Cheese and nonfat dry milk (NDM) prices should strengthen in 2009, reflecting the increase in support prices for those
products. Economic recovery in 2010 and slightly lower milk production should help boost prices for all products in 2010. The cheese price is projected to average
$1.235 to $1.255 per pound this year and climb to $1.510 – $1.610 in 2010. Butter prices are expected to average $1.180 – $1.220 per pound in 2009 and strengthen to $1.435 – $1.565 in 2010. NDM prices are projected to average 85 to 87 cents per pound and rise to 94.5 cents – $1.015 per pound in 2010. Whey prices are projected at 24 to 26 cents per pound in 2009 and 28 to 31 cents per pound next year.
Milk prices should recover from 2009 lows next year but should remain well below the highs of 2007 and 2008. The Class III price is expected to average $10.70 –
$10.90 per cwt in 2009 and rise to average $13.75 – $14.75 per cwt in 2010.
The Class IV price is projected to average $10.15 – $10.45 per cwt this year and reaches $12.10 – $13.20 per cwt next year. The all milk price average is expected to be $12.10 – $12.30 per cwt and rise to $14.65 – $15.65 per cwt in 2010.
Posted: August 31, 2009 at 6:55 pm
By News Editor
Here’s another story about dairymen and allied industries coming together to discuss the current milk market, and their concerns about it. Farmers in Ohio met to discuss the market effects of imports, marketing organizations and supply and demand, while a panel of experts spanning California to New York presented their plan for a new system of marketing milk.
Past U.S. Holstein Association President Doug Maddox said the fallout in dairy prices goes deeper than the current generation. He farms in California, where he operates RuAnn Dairy, one of the world’s largest registered dairy farms.
“This crisis that we’re in right now and how we solve it is as much about who and what controls our future, and our dairy industry, as it is about the prices and the current situation,” Maddox said. “Either the dairy farmers are going to control the industry and manage our supply and set our prices, or the processors and the large companies.”
Maddox said a dairy farmer is typically losing $3-$4 a day per cow, or $100 per cow per month. Farm equity is being turned into bank loans, and farmers are exiting the industry altogether, by choice or by force, and a few have exited by suicide, he said.
The meeting was organized by Ohio Farmers Union and a host of local sponsors in hopes of gathering more producer perspectives and educating farmers and consumers about the dairy industry.
New York dairy farmer John Bunting discussed the impact to the market of dairy processors and marketing cooperatives, as well as imported milk protein concentrate.
The country imported about 16 million pounds of milk protein concentrates in 2008, according to information Bunting compiled from the U.S. International Trade Commission. That’s up from 2007 imports of 14 million pounds, and 2006 imports of about 12 million pounds.
Milk protein concentrate is the industry term used to describe a form of processed, dried milk used in foods such as processed cheese products, macaroni and cheese, protein bars, nutritional drinks, candy bars and cookies.
Bunting is one of a growing number of dairy farmers who say imports are partly to blame for their struggles.
But not everyone agrees.
Maddox said imports are a factor but the industry is ultimately experiencing woes because of an imbalance of supply and demand.
“You can blame all the other things, but it all gets back to supply and demand; it’s economics 101,” Maddox said.
He is an advocate for the Dairy Price Stabilization program, a newly formed effort to stabilize the market through a mandatory, self-funded growth-control program.
(more…)
Posted: August 31, 2009 at 6:49 pm
By News Editor
The current milk price has spurred many dairy farmers into action, getting them more involved in how their milk is marketed. A group of dairymen from western N.Y. and several even from Pennsylvania, met to discuss the Federal Milk Marketing Improvement Act of 2009 last week, at a dairy rally held in N.Y.
A group of more than 150 dairy farmers, their family members, a handful of local officials, farmer union leaders and Congressman Eric Massa, D-29, addressed the audience and talked about the act. The proposed legislation, brought forward by Sen. Arlen Specter, D-Pa, and Sen. Robert Casey Jr., D-Pa., would change the amount farmers are paid for milk to the national average cost of production, eliminate reference to the Chicago Mercantile exchange in determining milk prices paid to dairy farmers and encourage new dairy farmers to produce milk by allowing them to be exempt from inventory management costs in their first year, among other things.
“This will provide a floor under the price of milk that will keep a majority of our dairy farmers in business, give them an opportunity to pay their bills and have an extremely modest level of income,” said Larry Breech, president of the Pennsylvania Farmers Union.
Breech said there is tremendous amount of opposition to the legislation, but it insists that dairy farmers all of the country will begin closing if some governmental action is not taken.
“Dairy co-ops have miserably failed to represent their members and that’s why we are at the pint we are at now,” he said.
“Right now dairy farmers have seen a 47 percent drop in the prices they were getting last year and we have to get them some short-term relief immediately,” said Arden Tewksbury, manager of the Progressive Agriculture Organization.
“There are many farms that are going to be closing soon. People argue the number is as high as 25 or 35 percent,” he said.
Dairy farmers at the rally said they are getting as low as $10 to $12 a hundredweight, an amount they say doesn’t even cover operation costs.
A study by Cornell University estimated that farmers need to be paid at least $17 per hundredweight to cover production expenses.
“Because we have married ourselves to a free trade system that gives everything away and does not protect our consumers the international market collapsed and here we are sitting on huge surpluses,” Massa said. “By the way, you saw the price of milk at the producer drop by 50 percent, but we never saw the price of milk in retail drop that much. Now, somebody is making a hell of a lot of money, and candidly, it is not much different then we saw in the petroleum industry. The price of crude went from, what was it, $140? To $50 a barrel and yet the prices at the pump did not drop that same ratio.”
Posted: August 30, 2009 at 9:40 pm
By Cindy Zimmerman
In the largest dairy producing area of the top dairy state, it was no surprise that dairy was the number one topic addressed during a visit by Agriculture Secretary Tom Vilsack to Modesto, California last week on his Rural Tour.
Vilsack was joined at the event by California Congressman Dennis Cardoza, Deputy Secretary of Agriculture Kathleen Merrigan and California Secretary of Agriculture, A. G. Kawamura. Together they listened to the concerns of nearly 400 frustrated dairy producers imploring for help to stem the losses that threaten their livelihood.
“I’d like to thank you for all you’ve done so far, but it isn’t enough,” said Linda Lopes, president of the California Dairy Women. “We need the support price to be higher, we need it to be extended longer, and we need it to be floored. Because right now all of us are surviving on our equity and if this price doesn’t come up and stay up for a long time, the next time there won’t be any equity to borrow against and that will be the end of the dairy industry in California.”
Vilsack outlined what USDA has done so far to help producers, including export subsidies, increased federal purchases for nutrition programs and raising the support price for dairy products. The secretary said he wants to do more but he has to wait until Congress is back in session. “The problem is that we are now facing the beginning of a new fiscal year,” Vilsack said. “It’s not a simple thing to do what you have asked me to do. I want to do it, I want to help. We are going to try and work through the process.”
Vilsack also talked about the formation of a 15 member dairy industry advisory committee to help come up with solutions to the industry crisis, “to try to figure out what will be better than what we have today.”
Listen to some of the comments and questions from the California Rural Tour in this Milking Parlor podcast sponsored by Fort Dodge Animal Health: milking-parlor-fdah-2.mp3
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Posted: August 27, 2009 at 9:37 am
By Cindy Zimmerman
This edition of the Milking Parlor podcast focuses on what is being done on the national level to address the current dairy industry crisis. From congressional actions to USDA to the dairy industry itself, we hear from Congressman John Boccieri, Sen. Bernie Sanders, Agriculture Secretary Tom Vilsack, University of Wisconsin Ag Economist Dr. Bruce Jones and National Milk Producers Federation president Jerry Kozak.
Thanks to Fort Dodge Animal Health for sponsorship of this regular monthly podcast for dairy industry professionals. We encourage your feedback, comments and questions to provide input for future editions of the program.
Listen to this podcast here:
milking-parlor-fdah-1.mp3
Subscribe to the Milking Parlor podcast here.
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