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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Posted: July 27, 2009 at 7:53 pm
By News Editor
Agriculture Secretary Tom Vilsack will appoint an advisory board to recommend how the government can avert further freefalls in the price dairy farmers are paid for milk, his office said.
The advisory board, whose membership has yet to be determined, could take the place of a congressionally mandated commission that was dictated by the 2008 farm bill but has yet to be appointed because of a budget-related disagreement with Congress — although the USDA did not rule out also creating the panel directed by Congress.
A panel could give the government more momentum to make significant changes in the system that sets minimum prices that dairy plants must pay farmers for milk, a long term solution that many people in the dairy industry say is necessary to smooth out the wide price swings that put farmers out of business in some years and hurt milk bottlers, cheese makers and other dairy processors in other years.
Any changes in policy, however, would be a few years away — soon enough, perhaps, for the next low cycle in milk prices but too late to save the hundreds of farmers in New York who experts say could go out of business due to this year’s price crisis.
Mr. Vilsack’s spokesman, Caleb Weaver, said the board would include “a whole cross section of people involved in the dairy industry.”
He couldn’t say when the board will be appointed or when Mr. Vilsack hopes it to finish its work.
From the USDA’s perspective, an advisory board may make more sense than the farm bill’s commission. Mr. Vilsack has freedom to set the advisory board’s composition and priorities, whereas Congress dictated the general makeup of the commission and its scope of work. He can also work around the farm bill’s requirement that a commission be appointed subject to funds being approved by Congress — something that has not happened and may not happen this year, if spending bills now moving through Congress are an indication.
The department has also stepped up government purchases of nonfat dry milk through the price support program, which takes excess dairy products off the market.
An advisory board could look at a wide range of ideas, from increasing government payments to farmers when prices fall, to simplifying the system and reducing the number of federal marketing orders that set prices around the country. Some groups have also called for measures to enhance competition among milk sellers and buyers, reversing a trend that has put most milk in the hands of just a few large companies and dairy cooperatives.
One idea that seemed to gain traction at a House Agriculture subcommittee hearing on Tuesday was reducing the number of marketing orders or possibly doing away with the idea of different prices in different regions by creating one national order.
Posted: July 21, 2009 at 4:42 pm
By News Editor
From the USDA‘s newly released “Livestock, Dairy & Poultry Outlook,” a report from the Economic Research Service.
Dairy: Feed prices are expected to moderate slightly both this year and next. But milk supplies still lead demand, and exports are expected to be well behind the last two years. Consequently, prices will remain weak this year. A modest improvement in prices is
expected in 2010 as the dairy herd decline helps to move supplies into line with demand.
Feed prices appear to be moderating slightly from last year’s highs. Corn is forecast to average $3.95 – $4.15 per bushel in the 2008/09 crop year and $3.35 – $4.15 for the next crop year. Soybean meal prices will average slightly below the previous year in 2008/09 and are forecast lower in 2009/10. Feed prices, however, will remain above the 5-year average for both corn and soybeans. Forage prices will likely follow grain prices moderating into 2010. While welcome, lower feed prices alone will not restore producer profitability. Recession-reduced demand weakness will keep dairy product prices below year-earlier levels for the balance of 2009.
The result is continued pressure to remove cows from production. The Cooperatives Working Together (CWT) program is expected to remove about 101,000 cows from the herd by the end of July.1 The U.S dairy herd is expected to contract 1.5 percent in 2009 from 2008 and another 2.6 percent contraction is expected in 2010. Yet some of the decline in cow numbers is offset by continued gains in milk per cow. In 2009, milk per cow per day increased 1 percent and is forecast to climb nearly 2 percent in 2010. Milk production this year is projected at 187.6 billion pounds, unchanged from last month’s forecast and next year’s production is forecast at 186.4 billion pounds. This leisurely decline is encountering a recession-weakened domestic market.
Exports both this year and next, with the exception of whey, are likely to be well below the totals for the last two years, and are forecast at 3.8 billion pounds of milk equivalent, fat basis, in 2009 and 3.9 billion pounds in 2010. Whey exports, mostly to Mexico and China, have made the skims/solids exports numbers appear stronger. Those exports are forecast to total 19.9 billion pounds this year and 23.1 billion pounds next year.
Product prices will likely remain low in 2009. Cheese prices are projected to average $1.210 – $1.2402 per pound; butter prices are expected to average $1.175 – $1.235 per pound. The outlook for dry products is also for low prices for the year with nonfat dry milk (NDM) averaging 82.5 – 85.5 cents per pound and whey averaging 24 – 26 cents per pound. Prices are expected to recover in 2010 but not to their previous levels. Cheese prices are forecast to average $1.530 – $1.630 per pound in 2010. Butter prices are forecast to stage the strongest recovery and average $1.435 – $1.565 per pound for the year. NDM prices are expected to average $0.990 – $1.060 per pound for the year and whey 28 to 31 cents per pound next year.
The product price forecast presages weak milk prices this year and only modest improvements next year. Class III prices are forecast to average $10.45 – $10.75 per cwt in 2009 and $13.90 – $14.90 per cwt next year. The Class IV price is projected to average $9.95 – $10.35 per cwt in 2009 and $12.45 – $13.55 per cwt in 2010. The all milk price will likely average $11.85 – $12.15 this year, improving to $14.85 – $15.85 per cwt in 2010.
Posted: June 9, 2009 at 1:23 pm
By Amanda Nolz
The United Business Media PR Newswire posted some positive media coverage for June Dairy Month, boasting the nutritional benefits of milk, cheese and yogurt. PR Newswire is the global leader in innovative communications and marketing services, enabling organizations to connect and engage with their target audiences worldwide. This media outlet provided an in-depth, insightful look at the wonderful world of dairy including: health benefits for life, dedication to children’s health and commitment to a healthy environment.
June is National Dairy Month, a great opportunity for Americans to recognize that low-fat and fat-free dairy foods present a unique combination of both nutritional and economic value. Now is the time to remember the recommendation to get three servings of dairy daily – not only milk, but also cheese and yogurt, since these foods also are valuable and tasty sources of essential nutrients.
Families these days are looking to get the most nutrition they can with their food budget. Dairy is a naturally nutrient-rich food group that, for the most part, comes at a low cost — often just pennies per serving. One eight-ounce glass of milk for example provides nine essential nutrients: calcium, potassium, phosphorus, protein, vitamins A, D and B12, riboflavin and niacin (niacin equivalents).
To read the entire article, link to the PR Newswire. For additional information, link to the National Dairy Council.
Posted: April 6, 2009 at 7:07 pm
By News Editor
A small ray of sunshine for our country’s dairy farmers – the USDA’s Economic Research Service (ERS) has raised its predictions for milk prices.
In its March “Livestock, Dairy and Poultry Outlook” report, ERS economists write, “As a result of higher cheese and butter prices than forecast earlier, the prices for Class III and Class IV milk have been raised slightly, to $10.05 to $10.65 per pound and $9.50 to $10.20 per pound for 2009.”
Last month, the ERS figured the Class III price would average between $9.70 and $10.40, so the new estimate is 25 to 35 cents higher. Also last month, the ERS said the Class IV price would average between $9.35 and $10.15. That means the new forecast is up by 5 to 15 cents.
Ditto for the U.S. “all-milk” price. In its March statement the ERS looks for that price to average $11.25 to $11.85. That’s an increase of 20 to 30 cents from the February estimate of $10.95 to $11.65.
This latest report is the first in months to state that higher milk prices instead of lower ones n are expected. Make no mistake: Those higher predicted prices are still well below the averages of last year.
Turning to dairy product prices, the ERS says commodity cheese prices should average $1.215 to $1.275 per pound this year. It expects butter prices to average $1.105 to $1.195 per pound.
Nonfat dry milk prices should average 80.5 to 85.5 cents a pound. And, the ERS looks for whey to average 16 to 19 cents per pound. There’s also good news on the demand side. The outlook report says demand for butter and cheese has been “stronger” than expected.
“Lower prices have stimulated additional use. Commercial use is forecast to rise by one percent on a fats basis, and by better than two percent on a skims/solids basis in 2009,” says the report.
On the other hand, exports of milk equivalents are expected to fall to 5.1 million pounds, from 8.8 million pounds last year. The ERS explains that the declines in exports are due to “global recession reducing demand, and to rising production in Australia and New Zealand…”
Looking at production, the report says per-cow output will be up slightly this year. But a contraction in the nation’s “herd” is expected, too. The forecast is for 1.3 percent fewer cows than in 2008. Cow numbers began to fall in January. The economists say the steepest declines will likely come in July and later.
“Output per cow will rise fractionally, to 20,500 pounds…Total milk production will be lower in 2009, at 188.5 billion pounds, a decline from 190 billion pounds in 2008,” says the report.
Feed prices are “moderating,” says the ERS. Still, comparatively weak demand is holding milk prices down.
Posted: April 2, 2009 at 8:26 pm
By News Editor
Retail milk prices have dropped, according to the latest American Farm Bureau Federation Marketbasket Survey.
Shredded cheddar cheese, milk and vegetable oil showed the largest retail price declines and together account for most of the decrease in average price of the overall marketbasket. Shredded cheese dropped 70 cents to $4.24 per pound; milk dropped 67 cents to $3.15 per gallon; and vegetable oil dropped 38 cents to $2.79 for a 32-oz. bottle.
For the first quarter of 2009, shoppers reported the average price for a half-gallon of regular whole milk was $2.16, down 22 cents from the prior quarter. The average price for one gallon of regular whole milk was $3.15, down 67 cents. Comparing per-quart prices, the retail price for whole milk sold in gallon containers was about 25 percent lower compared to half-gallon containers, a typical volume discount long employed by retailers.
The average price for a half-gallon of rBST-free milk was $3.19, down 26 cents from the last quarter and nearly 50 percent higher than the reported retail price for a half-gallon of regular milk ($2.16).
The average price for a half-gallon of organic milk was $3.71, up 1 cent compared to the third quarter and approximately 70 percent higher than the reported retail price for a half-gallon of regular milk ($2.16).
Compared to a year ago (first quarter of 2008), the retail price for regular milk in gallon containers decreased by 17 percent while regular milk in half-gallon containers decreased 10 percent. The average retail price for rBST-free milk dropped about 3 percent in a year’s time. The average retail price for organic milk in half-gallon containers went up and down slightly throughout the year, rising about 2 percent in the first quarter of 2009 compared to a year ago.
“Continued weak demand overseas for U.S. dairy products combined with increased on-farm production are behind the softening retail prices for shredded cheese and whole milk,” said Jim Sartwelle, an AFBF economist.
As retail grocery prices have increased gradually over time, the share of the average food dollar that America’s farm and ranch families receive has dropped.
“Starting in the mid-1970s, farmers received about one-third of consumer retail food expenditures for food eaten at home and away from home, on average. That figure has decreased steadily over time and is now just 19 percent, according to Agriculture Department statistics,” Sartwelle said.
Using the “food at home and away from home” percentage across-the-board, the farmer’s share of this quarter’s $47.41 market basket would be $9.00.
Posted: March 5, 2009 at 5:24 pm
By News Editor
The U.S. Department of Agriculture is already moving forward to examine a petition submitted last month by National Milk Producers Federation (NMPF) to eliminate the producer-handler exemption in all Federal Milk Marketing Orders.
In the proposal, submitted by NMPF and International Dairy Foods Association, large producer-handlers bottling more than 450,000 pounds of milk per month would no longer be able to circumvent minimum pricing and region-wide pooling provisions. The USDA said on Feb. 6 that it is considering initiation of a formal rulemaking proceeding that could include a public hearing to collect evidence regarding the proposed changes.
In its petition to USDA on Jan. 30, NMPF expressed its belief that all milk bottlers across the country should be regulated under the same rules, based on their impact on the market, and the rules need to be adjusted in light of the growing number of huge mega-farms that can exploit a loophole in milk pricing regulations.
Posted: March 3, 2009 at 8:07 pm
By News Editor
Dairy producers and managers faced with depressed milk prices can share ideas and find solutions for managing through the current environment at dairy roundtable meetings hosted by the Center for Dairy Excellence with Penn State Cooperative Extension and the Penn State Dairy Alliance. Although participation is free, reservations are required. Any dairy producer interested in attending should contact the Center for Dairy Excellence at 717-346-0849.
Three meetings are slated this month in Blair, Centre and Lancaster counties, featuring business experts from Farm Credit. The meetings are free of charge and lunch is provided.
“The current economic situation in the dairy industry has put many of Pennsylvania’s dairy farms in jeopardy,” said John Frey, executive director of the Center for Dairy Excellence. “The meetings will bring producers together to share ideas on managing their dairies through this downturn and how to improve short-term and long-term cash flow.”
The meetings dates and locations are:
* Tuesday, March 17, from 10:00 a.m. – 1 p.m. at Celebration Hall, 2280 Commercial Boulevard, State College, Pa.
* Thursday, March 26, from 11:30 a.m. – 2:30 p.m. at the Martinsburg Airport, 2 Airport Drive, Martinsburg, Pa.
* Monday, March 30, from 11:30 a.m. – 2:30 p.m. at the Lancaster Farm and Home Center, 1383 Arcadia Road, Lancaster, Pa.
Posted: January 26, 2009 at 7:34 pm
By News Editor
With a new leadership team arriving this past week in the White House, and the U.S. Department of Agriculture, the National Milk Producers Federation (NMPF) today urged that they turn immediate attention to helping dairy farmers weather the crushing collapse in dairy prices.
“The plight of dairy farmers is just part of the overall ongoing story of the global recession, but it also needs to be the focus of the new Congress and the new Obama Administration,” said Jerry Kozak, President and CEO of NMPF. “Given the suddenness and severity of the plunge in farm-level milk prices, a significant number of farmers won’t survive the winter with the prices they’re receiving.” Kozak noted that farm-level milk prices in February will be nearly 50% less than at the beginning of 2008, even though farmers’ input costs, including feed and fuel, are still above historic averages.
Contrary to rumors that NMPF has been seeking some sort of government dairy cow buyout in the pending stimulus package, Kozak said that NMPF remains focused on utilizing its six year-old Cooperatives Working Together program as the primary means to manage the dairy supply. CWT is a farmer-funded, self-help program that helps balance supply with demand. Kozak said that CWT is in the process of obtaining a line of credit with a major agricultural lender to help it augment its efforts in 2009, making a government loan guarantee unnecessary.
Kozak said that NMPF had already taken a series of steps to focus the attention of policymakers on the dairy crisis. These include:
Offering the USDA a list of actions it can take immediately to help producer prices, such as making it easier for cheese makers to sell products to the USDA under the dairy product price support program, using more dairy foods in government feeding programs, and resurrecting the dormant Dairy Export Incentive Program to boost overseas sales of U.S. products. That letter was sent Jan. 8th to outgoing Agriculture Secretary Ed Schafer. Kozak said newly-approved Agriculture Secretary Tom Vilsack should consider the letter’s recommendations, especially since the proposals are ones that USDA should be able to implement quickly.
Urging the USDA to ensure the maximum flexibility for dairy producers to choose the months they wish to receive their Milk Income Loss Contract payments. NMPF believed the USDA was sending confusing, arbitrary and overly-restrictive information to farmers about the parameters of choosing direct payments, and in a letter earlier this month, urged the department to reconsider its approach. USDA has subsequently sent clarifying instructions to its state and country offices to ensure that farmers are afforded more flexibility in signing up for the MILC program. Kozak said that the MILC program will begin issuing payments to producers on their February milk production, and thus getting the program operating correctly is of critical importance;
Preventing the agency from selling nonfat dry milk powder at prices lower than specified in the dairy product price support program. NMPF initiated legal action last month to stop the USDA from using a third-party auction service to sell the powder. The USDA subsequently dropped those plans, ending the need for further litigation by NMPF.
Posted: June 13, 2008 at 1:21 pm
By Cindy Zimmerman
Dairy Markets Week in Review
The cash block cheese market continued to weaken the second week of June and closed Friday at $2.04 per pound, down 12 cents on the week, and just 4 cents above a year ago. Barrel closed at $2.15, unchanged on the week, 10 cents above a year ago, and 11 cents above the blocks.
Sixteen cars of block traded hands on the week and none of barrel. The NASS-surveyed U.S. block average hit $2.1630, up 9.1 cents, while barrel averaged $2.2152, up 7.8 cents.
Butter closed at $1.4775, down a quarter-cent, and a quarter-cent below a year ago. Four cars sold. NASS butter averaged $1.4741, down 0.2 cent.
Nonfat dry milk averaged $1.3613, up 2.3 cents. Dry whey averaged 27.61 cents, up a half-cent. There were a couple of sales of nonfat dry milk in the cash market this week but prices were unchanged. Grade A held at $1.4650 and Extra Grade at $1.46.
Provided courtesy of Dairyline.
Posted: June 2, 2008 at 9:51 am
By Laura McNamara
Allegations of dairy price fixing are still, well, milky. It’s been almost two weeks since the Wall Street Journal reported that federal commodity regulators were investigating Dairy Farmers of America for price fixing and manipulation. The farmer-owned dairy cooperative controls about one third of the nation’s milk supply.
Monica Coleman, a spokeswoman for the Dairy Farmers of America, said the Commodity Futures Trading Commission is looking into the group’s trading of cheese futures on the Chicago Mercantile Exchange.
The price of cheese futures can impact milk prices. The Department of Agriculture sets a minimum price of milk that is based in part on a survey of cheese prices that includes futures prices…
The Journal reported that the CFTC is preparing to bring charges against DFA.
“We do not believe we have violated any laws, and we have and will continue to cooperate,” Rick Smith, president and chief executive of the DFA, said in a statement.
The price of milk jumped 13.5 percent in the past year, according to the Bureau of Labor Statistics, but Coleman said the “alleged activity is from 2004 and does not affect milk prices today.”
A spokesman for the CFTC would neither confirm or deny any investigation.
The DFA markets 61.7 billion pounds of milk for more than 19,000 dairy farm members.
Click here to view the entire article on CNNMoney.com.
Posted: May 30, 2008 at 5:20 pm
By News Editor
Dairy farmers in Germany are dumping their milk to boycott the declining price paid to them for their production.
While global food prices have soared, milk prices here have fallen by almost a third this year, the Federation of German Dairy Farmers said, in part because the European Union decided to raise its production quotas. Prices fell even as milk production costs for staples like fuel and feed rose by a quarter. So in a desperate effort to force a price increase, the dairy farmers began a delivery boycott on Tuesday.
The federation estimated that around 10.6 million gallons of milk — up to 60 percent of the country’s production — was dumped, fed to other animals or used for fertilizer on Wednesday alone. The strike had not yet affected grocery store shelves. Milk producers in neighboring countries, including Belgium and Austria, urged dairy farmers to join the strike or at least not to export to Germany.
Posted: March 6, 2008 at 4:06 pm
By News Editor
Here’s your chance to comment on amendments the USDA has made to three Southeastern Federal orders. The changes were made based on testimony and evidence given at a public hearing in Tampa, Fla. in May 2007. All comments are due by April 29.
USDA has amended the three Southeastern Federal orders by raising their Class I prices. The interim decision raises Class I differentials in the Florida, Appalachian, and Southeast markets by between 10¢ in Louisville, Kentucky, and $1.40 in Miami, Florida. Similarly, the transportation credit programs in the Appalachian and Southeast markets have also been expanded. Other provisions in these two markets will reduce the volume of pooled milk that a handler can divert to non-pool plants, but reduce the number of days that a producer’s milk must be delivered to a pool plant, in order to simplify hauling logistics.
This decision is based on testimony and evidence given at a public hearing held at Tampa, Fla., May 21-23, 2007. USDA will conduct referendums to determine if producers approve the amended orders. If approved, USDA will issue an interim order making the amendments effective.
Posted: March 4, 2008 at 7:24 pm
By News Editor
Five dairy farmers representing Pennsylvania, New York, Wisconsin, Minnesota and California held a press conference on Monday to help bring awareness to the dropping milk price and the rising cost of inputs.
It comes at a time when the price for class I milk dropped more than $5 since September, along with a $7.20 drop for class IV milk. To compound the situation, dairy farmers in Pennsylvania can expect a 25 to 35 percent increase this spring in the cost it takes to produce milk. In January, area dairy farmers received around $22 per hundredweight for their milk, and Arden Tewksbury of Pennsylvania Progressive Agriculture Organization in Meshoppen said it costs Pennsylvania farmers $27.59 to produce 100 pounds of milk.
In January, Tewksbury predicted milk prices to drop $4 per hundredweight this spring. If that happens, the price farmers would receive for their milk would drop to $18, while the cost to produce it would jump to over $30.
“It may be worse than we predicted,” Tewksbury said. “Dairy farmers are not receiving a realistic price that covers the average cost of producing milk.”
Price-support programs, such as the Milk Income Loss Contract (MILC), are ineffective, according to Wisconsin dairy farmer Joel Greeno.
“If milk prices were to drop to levels that the MILC would kick in, I would be losing $3,375 a month,” he said. “It would be pretty hard to pay the bills on that.”
Minnesota dairy farmer LoriJayne Grahn said the cost of production factor is critical because dairy farmers have no ability to raise their prices. The answer, she said, lies in the cost of production, and the matter almost became a reality last year when U.S. Sens. Robert Casey, D-Scranton, and Arlen Specter, R-Philadelphia, introduced Senate Bill 1722.
Tewksbury said the bill incorporates national cost of production into the pricing formula, eliminates hauling charges for farmers and implements a supply management program that can kick in when milk exports equal imports. The bill has sat in the Senate Committee on Agriculture, Nutrition and Forestry since last June.
“Presently, the value of milk across the country is basically the same, and dairy farmers from every state agree we need a new pricing formula,” Tewksbury said. “We’re hoping we can get bill 1722 moving or something similar to it.”
Casey also attempted to include the cost of production as an amendment to the 2008 Farm Bill but failed to garner support from his fellow senators.
Posted: January 9, 2008 at 5:57 pm
By News Editor
Farm prices have been in the news this week – corn prices could rise to $4.75 per bushel, while the year in reveiw shows that the Class III price for 2007 averaged $18.04 (a record hgh) and the weekly average block cheese price was $1.7586 (another record high).
Corn prices could push into the $4.75-per-bushel range this year, says Chris Hurt, Purdue University agriculture economist. A 6 percent drop in corn acreage is not unlikely, Hurt notes, as a short supply of crops globally (particularly wheat and soybeans) will have some out-bidding corn for acreage. As for ethanol, new plant openings in the first half of 2008 will push production from the current 7.3 billion gallons up to 11.8 billion gallons. The corn necessary to feed that capacity will grow from about 2.5 billion bushels today to 4 billion bushels by July, Hurt notes. That capacity will grow by another 500,000 bushels in the second half of the year.
With the December Class III price now in, the Class III price will average $18.04 for 2007. That is a new record high, topping the previous record of $15.39 set in 2004. The 2007 Class IV price also sets a new record average of $18.36. The previous record holder was $14.85 set in 1998.
Weekly average block and barrel cheese prices at the Chicago Mercantile Exchange also boasted new record annual highs last year. The annual average of all the weekly average block prices in 2007 is $1.7586, up nearly 52 cents from 2006, according to the USDA’s Agricultural Marketing Service. The new annual record high for barrel prices is $1.7404, also up 52 cents from 2006.
Posted: August 31, 2007 at 5:43 pm
By News Editor
A great article that explains how milk prices are effected in easy terms for consumers – and let’s them know that dairy producers aren’t the ones setting the retail price.
Consumer and dairy managers continue to wonder when and if the price of milk and dairy products will decline, said a University of Illinois Extension dairy specialist.
“In June 2007, a gallon of milk was 43 cents higher in price than in June 2006 and butter was up 18 cents per pound over the same period, according to the USDA,” said Michael Hutjens. “However, prices can vary greatly among regions and within states.”
Several factors will impact consumer prices for milk and dairy products in the future, he added.
“With school starting, milk consumption can increase along with more emphasis on low-fat milk and nutritionally desirable beverages,” he said. “A weak U.S. dollar makes exporting U.S. dairy products cheaper and milk production quotas in Canada and the European Union limit additional production in those areas.
“Finally, Chinese demand for dairy products continues to expand.”
For the dairy farmer, milk prices have increased from $14.50 per 100 pounds in January 2007 to $21.70 in July.
“While the farm-gate milk prices are expected to drop, fall prices may reach $18 per hundredweight — higher than earlier estimates,” he said.
Among the factors impacting milk production this fall are:
Heat stress in the late summer which can reduce milk and crop yields; n The availability of more replacement heifers to begin milking (42.6 heifers per 100 cows in July 2007 compared to 41.5 heifers per 100 cows in July 2006); Replacement heifer prices have increased $200 per head in one month, reaching $1,950 per animal, which can reduce the sale of heifers; A milk-to-feed ratio of 3.19. When the ratio is over 3, it signals dairy managers to increase milk production as feed is relatively less expensive compared to milk prices.
Consumers have been choosing more milk and dairy products. Dairy product consumption in 2006 averaged 606 pounds of milk equivalent, the highest figure since 1987. Cheese led the way with an average of 31.2 pounds per person and fluid milk consumption was up three pounds, reversing a downward historical trend.
The rising milk price has put pressure on other segments of the dairy industry.
“Pizza prices are increasing,” said Hutjens. “Hershey and Dean’s milk report lower profits, and Starbucks has increased their milk/coffee beverage price by nine cents.
“Consumers may be able to look ahead to lower milk prices, but they may see a drop of 50 cents a gallon near the holiday season.”
Posted: August 28, 2007 at 7:56 pm
By News Editor
A group of Vermont dairy farmers has gain momentum for a plan to help stabilize milk prices – two large California cooperatives has expressed interest in backing the plan. The proposal would call for dairy producers to pay 15-cents per hundred weight of milk sold.
A grass-roots group of Vermont dairy farmers has won backing from two California dairy cooperatives for a plan designed to bring stability to see-saw prices paid to the nation’s farmers for their milk.
Margaret Huessy-Laggis of Hardwick, a member of the Vermont-based Dairy Farmers Working Together organization, said representatives for the California-based Milk Producers Council and Western United Dairymen agreed to support the plan during a meeting last week in Chicago of dairy farmers from around the country.
The two California cooperatives represent 1,100 of California’s estimated 1,800 dairy farmers.
“It’s astounding,” Huessy-Laggis said. “We have farmers in Florida, Vermont, Wisconsin and California who all agree on one plan. I don’t think that has ever happened before.”
The plan being pushed by the Vermont group would require all dairy farmers to pay 15 cents for every 100 pounds of milk they produce into a fund that would be used to stabilize the price paid to farmers and help leverage international deals for milk products.
The group has been traveling the country and meeting with farmers to gain support for the plan, hoping the effort will lead to the plan’s inclusion in this year’s congressional rewrite of the Farm Bill. Under the plan, federal subsidies paid to dairy farmers would end.
Geoffrey Vanden Huevel of the Milk Producers Council of Chino, Calif., said Monday in an interview that his group is ready to support the plan if a Cornell University dairy economist’s report on the Vermont plan mirrors what the economist told the farmers meeting in Chicago last week. He said he dropped an alternative plan he was promoting in favor of the Vermont plan because the Vermont plan is more acceptable to the owners of large and small dairy farms. Farmers from 10 states participated in the meeting Thursday in Chicago, in person or by telephone.
Huessy-Laggis said her group hopes to pitch its plan to the St. Albans Cooperative Creamery Inc. this week and is seeking support from the Kansas City-based Dairy Farmers of America, the nation’s largest milk cooperative. A group of Vermont farmers also plans to travel to Oregon and Washington next week to talk up its plan with dairy farmers in those two states, she said.
Posted: June 14, 2007 at 6:28 pm
By News Editor
Pennsylvania’s Governor Rendell is pleased with the action of the Pennsylvania Milk Marketing Board to possibly capture over-order premiums for milk sold out-of-state.
Governor Rendell petitioned the board last year to use its authority to capture over-order premiums in other marketing areas, a move that would boost the profitability of Pennsylvania dairy producers.
The board agreed to consider the part of the Governor’s recommendation that would establish over-order premiums on milk produced and processed in Pennsylvania and sold in states with mandated producer premium. This change, if implemented, will make approximately 6.5 percent more Pennsylvania milk eligible for a premium.
Milk produced, processed and sold within the commonwealth receives a premium above the latest federal order milk price. However, if milk is processed or retailed in another marketing area, producers do not receive that money. Only 15-percent of the fluid milk produced in Pennsylvania is eligible for current premiums. By capturing a larger portion that is available in the marketplace, the state’s producers will increase their income.
Posted: May 30, 2007 at 7:19 pm
By News Editor
Wisconsin farmers, and other dairy producers across the country, are optimistic as milk prices rise to levels that haven’t been seen in almost five years. With fuel prices and the demand for corn-based ethanol, producers are hoping the increase in the milk price will help offset the dramatically increased expensses.
“That’s the nature of farming and the commodity markets,” said Mike Wildeck, dairy agent for the University of Wisconsin-Extension Marathon County. “It’s supply and demand, and it’s a perishable product. It’s very cyclical.
“You have times when you can’t make ends meet and you’re cutting corners, and other times you get caught up on bills and maybe replace some machinery.”
The average price for Wisconsin milk in April was $17.20 per hundredweight, according to the U.S. Department of Agriculture’s Wisconsin field office. That’s up $4.70 from a year ago.
Last year, Wisconsin farmers earned an average of $13.30 per hundredweight for their milk, $2.30 less than the 2005 average. Corn prices have been rising as a result of demand for the corn-based fuel ethanol.
“They don’t hit the home run and hit the high price, but they kind of even out the the roller coaster,” Wildeck said. “It’s hard to run a business when it’s feast and famine.”
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